Court File and Parties

COURT FILE NO.: CV-21-00661467-0000 DATE: 2024-07-18

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Nissan Canada Inc. v. Northbridge General Insurance Corporation

BEFORE: Associate Justice G. Eckler

HEARD: June 17, 2024

COUNSEL: J. Black for the moving party/defendant Northbridge General Insurance Corporation G. Bowden, for the responding party/plaintiff Nissan Canada Inc.

Reasons for Decision

Overview

[1] The defendant, Northbridge General Insurance Corporation, brings this motion seeking an Order granting leave to amend its statement of defence to withdraw an admission.

[2] For the reasons that follow the defendant’s motion shall be granted.

Facts

[3] In support of this motion, Northbridge relies on the affidavit of Shaunak Desai, sworn on May 1st 2023. Mr. Desai is a lawyer with the offices of counsel for the moving party, Northbridge.

[4] Nissan relies on the affidavit of Linda Cozza, Supervisor with Nissan, sworn on January 30th 2024.

[5] The facts as outlined below, have been taken from the pleadings and the two affidavits filed in this motion.

[6] This action arises out of property damage sustained to a motor vehicle following an accident which occurred on June 11, 2020. The vehicle forming the subject of this litigation, is a 2019 Infiniti Q60 (“the loss vehicle”).

[7] Nissan financed the loss vehicle which was leased by Legends Car Rental Inc. from Nissan. Legends Car Rental (“Legends) is the business/operating name for Corporate-Rent-A-Car. Northbridge issued a policy of insurance to Legends for a number of vehicles in its short-term rental fleet.

[8] At the time of the accident of June 11th, 2020, the vehicle was being operated by Asad Mayo who had leased the vehicle from Legends. Mr. Mayo was an employee or manager with Legends. When he ceased working with Legends, Mr. Mayo and Legends agreed that Mr. Mayo could rent/lease the vehicle for a period exceeding 30 days.

[9] Mr. Mayo was involved in a serious single vehicle accident on June 11th, 2020. As Mr. Mayo was driving the loss vehicle, the vehicle left the roadway and struck a tree and guard rail. The loss vehicle was damaged and deemed to be a total loss. Mr. Mayo sustained significant injuries as a result of the accident.

[10] Following the accident, Nissan advised Northbridge of the loss and the matter was assigned a claim number. On September 15th, 2020, Northbridge sent Nissan a blank proof of loss. Nissan submitted an executed proof of loss to Northbridge on September 23rd, 2020. Northbridge acknowledged receipt of the proof of loss and indicated that its investigation was ongoing.

[11] Northbridge issued a reservation of rights letter to the non-party to this action, Legends advising that it was investigating coverage for the June 11th 2020 loss.

[12] Nissan alleges that Northbridge ceased communicating with Nissan and therefore the plaintiff, Nissan Canada Inc. (“Nissan”) commenced this action on April 30th 2021.

[13] Nissan alleges in the statement of claim that the loss vehicle was insured with Northbridge under Policy CBC 06722450. Nissan pleads that at all material times it was either a named insured or loss payee and that all material times there was in place a valid contract of insurance, under which Northbridge was required to pay Nissan in the event of a loss.

[14] Nissan commenced this action pursuant to the simplified procedure and is seeking a declaration that there is a valid policy of insurance in force wherein Northbridge is the insurer and the plaintiff is the loss payee or insured. Nissan is also seeking damages for breach of contract in the amount of $56,765.00 due under a contract of insurance plus interest and costs.

[15] On June 17th, 2021, the defendant, Northbridge General Insurance Corporation (“Northbridge”) served its notice of intent to defend.

[16] On June 21st, 2021, during a telephone call, counsel for Nissan demanded that counsel of record for Northbridge immediately serve a statement of defence on behalf of Northbridge. Counsel for Northbridge advised that Northbridge’s investigation into coverage was not yet complete.

[17] Counsel for Northbridge advised that given that a statement of defence was being demanded prior to Northbridge having completed its investigation, an amendment to Northbridge’s statement of defence may be required depending upon the insurer’s investigation.

[18] This conversation was confirmed in a follow up email dated June 21st 2021 sent by counsel for Nissan which confirms that an amendment to Northbridge’s pleading may be required in the future.

[19] In order to comply with the deadline imposed by Nissan, Northbridge served its statement of defence on June 21st, 2021. In paragraph 3 of its statement of defence, Northbridge admitted that it insured the loss vehicle on the date of loss. Paragraph 3 of Nissan’s statement of defence provides as follows:

3. The Defendant admits that at the subject time, it insured a 2019 Infiniti Q 60 Nissan motor vehicle as described in the Statement of Claim. The vehicle was insured under policy CBC 067222450, with named insured Legends Car Rental Inc. (“the Policy”)

[20] In its statement of defence Northbridge denied that the plaintiff, Nissan is entitled to the relief sought in the statement of claim and specially denied at paragraph 4 that Nissan is an insured under the Policy:

4. The Defendant denies the Plaintiff is an insured under the Policy and further denies coverage under the Policy to the Plaintiff, including as a loss payee.

[21] Plaintiff’s counsel unilaterally scheduled the examination for discovery of Northbridge which proceeded on December 10th, 2021. Ms. Jason Leung gave evidence on behalf of Northbridge. At the time of Mr. Leung’s examination for discovery, Northbridge’s investigation into the issue of coverage had not yet been completed. By way of undertaking, Northbridge agreed to provide particulars of its denial of coverage under the Policy within 60 days.

[22] On December 9th 2021, counsel for Northbridge wrote to counsel for Nissan to provide counsel with an Autoplus Report which suggested that the renter/driver was insured by Aviva on the date of loss. Counsel for Northbridge suggested that this was now a priority dispute between Aviva and Northbridge.

[23] During the hearing of the motion, counsel for Nissan advised that Nissan issued a statement of claim against Aviva seeking coverage. However, coverage was denied by Aviva as the driver, Mr. Mayo was an excluded driver under the relevant policy.

[24] On February 12th, 2022, Northbridge, in compliance of its undertaking, sent a letter to counsel for Nissan providing particulars of Northbridge’s denial of coverage to Nissan. In particular, Northbridge confirmed that coverage was being denied to Nissan, under the Policy for the following reasons:

i) The vehicle did not have OPCF 5C endorsement which permitted it to be rented. It was rented at the time of the collision. This represents a material change in risk and the insurer is denying coverage to the insured. ii) Nissan is a stranger to the insurance contract and is not an additional insured, loss payee or beneficiary in any way. It does not have privity. Nissan has no valid claim against Northbridge.

[25] After Northbridge completed its investigation, it served an updated affidavit of documents on July 14th, 2022, which included documents that suggested that the loss vehicle had been added to the Northbridge policy retroactively after it had already been destroyed in the motor vehicle accident of June 11, 2020. Northbridge did not learn about the motor vehicle accident until August 17, 2020.

[26] The fact that the loss vehicle was added to the policy after the date of loss was further canvassed during the continued examination for discovery of the Northbridge representative on July 19, 2022.

The Involvement of Merit Insurance Brokers Inc.

[27] Merit Insurance Brokers Inc. (“Merit”) is an Ontario corporation carrying on business as a duly licensed insurance brokerage firm. Merit acted as insurance broker for Corporate Rent a Car and certain corporate franchisees.

[28] In or around March of 2019, Merit assisted a corporate franchisee, Legends Car Rental Inc. (“Legends”) in applying to Northbridge for auto insurance in respect of its fleet of rental cars. In or about May of 2019, Northbridge issued a fleet auto policy in favour of Legends bearing policy number CBC0672245A.(“the Policy”) The effective date of the Policy was May 15th, 2019. Legends is a franchisee or subsidiary of Corporate Rent A Car.

[29] In May of 2019, Legends instructed Merit to add the loss vehicle to the fleet Policy. It appears that this request by Legends was not completed. In particular, on July 6th 2020, Dean Morrissey, insurance broker with Merit sent an email to Northbridge which seems to suggest that the change requested by Legends in May 2019, was not completed by Merit due to system issues.

[30] This email dated July 6th, 2020 specially states that an error was made by Merit in that it failed to add the vehicle to the Policy in May of 2019 as requested by Legends. The email states the following:

Please see the attached, this addition was missed on this file when issued. We believe that this occurred when we were having our system issues and restoration done and the follow up history was deleted. Please add to policy.

[31] The email dated July 6th 2020 is signed by Dean Morrissey.

[32] The July 6th email also attached an Automobile Policy Change dated May 27th 2019 (“Change Form”). The form dated a year earlier, being May 27th, 2019, seeks to add the loss vehicle (2019 Infiniti Q60) to the fleet policy CB0672245.

[33] In the May 27th, 2019 Change Form, the insured is noted to be “Legends Car Rental O/B Umar Basra”. There is no reference to Nissan or Infiniti Financial Services being added to the policy as additional insured or loss payee in the Change Form.

[34] This email dated July 6th, 2020, from Merit seems to confirm that Merit failed to add the loss vehicle to the Policy after a request was made by Legends to add the vehicle to the fleet Policy in May of 2019. Merit then sought to add the loss vehicle on July 6th, 2020, after the loss vehicle was a total loss and no longer in existence.

[35] Despite apparently not adding the loss vehicle to the Policy, on May 27th, 2019, Matt Morrissey, Insurance Broker with Merit, sent a “Confirmation of Insurance Coverage” to 401 Dixie Infiniti confirming that the loss vehicle was being added to Policy No: 9999-5209A with the named insured being Corporate-Rent-a-Car O/B Umar Basra (“Legends”)

[36] Northbridge has confirmed that this is not a valid Policy number and it appears that an actual Policy number was not assigned as Merit appears to not have made the request to Northbridge to add the loss vehicle to the Policy in May of 2019 despite sending to 401 Dixie Infiniti (a unit of Nissan Canada) the Confirmation of Insurance Coverage on the loss vehicle on May 27th, 2019.

[37] The Confirmation of Insurance date May 27th, 2019 also indicates that “the policy will show “X-Lienholder-Lessor – Infiniti Financial Services – A Unit of Nissan Canada Inc.” which suggested that Nissan was added as a loss payee when it appears that this was not the case.

[38] The email from Merit dated July 6th, 2020 which suggests that Merit made an error was not in the possession of counsel for Northbridge when a statement of defence was demanded by counsel for Nissan in June of 2021. When counsel for Northbridge located this email which appears to have been archived, she delivered an updated affidavit of documents to counsel for Nissan, approximately two weeks prior to the continued examination for discovery of the Northbridge representative.

Lead Up to This Motion

[39] The continued examination for discovery of a Northbridge representative proceeded on July 19th 2022.

[40] Northbridge argues that following the completion of the examination for discovery of the Northbridge representative, the plaintiff was apparently satisfied that there was no reason to further pursue Northbridge for indemnity, as plaintiff’s counsel indicated by email dated August 31, 2022 that the only outstanding issue was costs incurred for this action. In this email counsel for Nissan stated the following:

As a result of information we received at the recent examinations for discovery, we sued the broker, Merit and we are close to a settlement. In light of this, it is time to bring our client’s action against Northbridge to an end, and that means we need to sort out costs….

[41] On November 21st, 2022, Counsel for Nissan sent an email to counsel for Merit and counsel for Northbridge advising that he wanted to arrange a mediation.

[42] When counsel for Nissan indicated that he still intended to pursue Northbridge for indemnity, Northbridge sought to amend its statement of defence to withdraw the admission at paragraph 3 of its statement of defence. Counsel for Northbridge sent an email to counsel for Nissan attaching a proposed Amended Statement of Defence which included a withdrawal of the admission that the loss vehicle was insured under Policy CBC 067222450. Counsel for Northbridge noted that she delayed this step as after the July 2022 examination for discovery, counsel for Nissan had advised that Merit was likely paying the claim and the sole issue remaining between Nissan and Northbridge was the issue of costs.

[43] As the plaintiff did not consent to the amendment, the defendant brought this motion. Motion dates were proposed for December 2023 and early 2024.

[44] Northbridge served the motion record for this motion on March 1st, 2023. This motion was initially scheduled to be heard before me on March 20th 2024. However, as Nissan’s materials were inadvertently not uploaded to Caselines, the motion was adjourned to be heard before me on June 17th, 2024.

The Actions Against Merit

[45] On July 29th 2022, Nissan issued a separate statement of claim naming Merit Insurance Brokers Inc. as a defendant. In this ongoing action, Nissan is claiming damages for breach of contract and negligence in the amount of $56,765.00 due under a contract of insurance as well as interest and costs. The allegation against Merit is that it failed to add the loss vehicle to the Policy when requested to do by Legends with the result being that the loss vehicle was only added to the Policy in July of 2020, after the vehicle was already deemed to be a total loss.

[46] On May 2nd, 2023, Northbridge commenced a third party claim as against Merit seeking contribution and indemnity for any amounts which Northbridge may be found to be responsible to the plaintiff in the main action.

[47] Northbridge alleges that Merit was negligent in that it failed to add the loss vehicle to the Policy in May of 2019 when requested to do so by Legends. Northbridge further alleges that when Merit asked Northbridge to add the loss vehicle to the Policy on July 6th, 2020, Merit was aware or ought to have been aware that the loss vehicle had been destroyed.

[48] Northbridge pleads that it would not have agreed to add the loss vehicle to any Policy if it had known that the loss vehicle was deemed to be a total loss on June 11th, 2020, well before the July 6th, 2020 request was made by Merit to have the loss vehicle added to the Policy. Northbridge further pleads that Merit at no time requested that Nissan be added to the Policy as a loss payee and that even if such a request was made, it was made after the vehicle had been deemed to be a total loss.

[49] In its statement of defence, Merit alleges inter alia that on January 22nd, 2020, Legends and Mr. Mayo (the driver involved in the accident of June 11th 2020) entered into an agreement whereby Mayo agreed to take over full responsibility for the lease of the loss vehicle and full responsibility for any and all damage to the loss vehicle.

[50] Merit alleges that it had no knowledge of this agreement. Merit further alleges that on February 13 2020, Legends instructed merit to delete Mayo as a driver under the policy. Merit pleads that because Mayo agreed to accept full responsibility for all damage to the loss vehicle and because Legends deleted Mayo as a driver under the Policy there was no coverage under the Policy when Mayo was involved in the accident of June 11th 2020. Merit pleads specifically that Nissan has no claim against Northbridge or Merit pursuant to its alleged lien holder rights under the Policy.

Legal Analysis and Discussion

[51] The issue to be decided on this motion is whether Northbridge should be given leave to amend its statement of defence in order to withdraw an admission.

Amendment of Pleadings and Withdrawal of an Admission

[52] Rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 governs amendments to pleadings and uses mandatory language:

General Power of Court 26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[53] Rule 51.05 of the Rules of Civil Procedure provides that leave of the court is required to withdraw and admission in a pleading and provides as follows:

Withdrawal of Admission 51.05 An admission made in response to a request to admit, a deemed admission under rule 51.03 or an admission in a pleading may be withdrawn on consent or with leave of the court.

[54] Rule 1.04(1) of the Rules of Civil Procedure provides that “these rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”.

[55] The applicable test in determining whether leave should be granted to withdraw an admission was articulated in Antipas v. Coroneos, [1988] OJ No 137, para 12 and affirmed by the Ontario Court of Appeal in Szelazek Investments Ltd. v. Orzech, [1996] O.J. No. 336. The three part test is as follows:

(a) The proposed amendment raises a triable issue; (b) The admission was inadvertent or resulted from wrong instructions; and (c) The withdrawal will not result in any prejudice that cannot be compensated for in costs.

[56] Counsel for Nissan advised during oral submissions that while Nissan’s position is that Northbridge does not meet any of the three branches of the test, Nissan’s main arguments in terms of opposition to the requested relief relate to the first two branches of the test and less so with respect to the third branch relating to prejudice.

(a) Does the proposed amendment raise a triable issue?

[57] The admission which is sought to be withdrawn is the following at paragraph 3 of Northbridge’s statement of defence:

3. The Defendant admits that at the subject time, it insured a 2019 Infiniti Q 60 Nissan motor vehicle as described in the Statement of Claim. The vehicle was insured under policy CBC 067222450, with named insured Legends Car Rental Inc. (“the Policy”)

[58] It is important to note that this admission refers to the named insured Legends Car Rental Inc. who is not a party to this action.

[59] The evidence in the record before me indicates that the loss vehicle was added to the Northbridge policy retroactively, such that the loss vehicle may appear to be on the Policy as of the date of loss. However, the addition of the loss vehicle to the Northbridge policy was done after the loss vehicle had been destroyed and before Northbridge had become aware of the total loss of the vehicle.

[60] Northbridge is seeking to bring the pleadings in line with the subsequently discovered facts and evidence which includes evidence that the loss vehicle was added to the Policy when the vehicle was no longer in existence and had been declared a total loss following the June 11th 2020 accident.

[61] I am of the view that the question of whether or not Northbridge covered the loss vehicle at the relevant time is a triable issue. In particular, the Court must determine in the circumstances whether there was a valid policy in place covering the loss vehicle as of June 11th 2020.

(b) Was the admission inadvertent or did it result from wrong instructions?

[62] This branch of the test must be given a liberal interpretation. (Hughes v. Toronto Dominion Bank, [2002] OJ No 2145, para.6 (“Hughes”)). In Antipas, the Court confirmed that this second branch of the test should not be applied strictly. In this regard, the Court confirmed that if there is a triable issue, “a party should be able to withdraw an admission upon furnishing a reasonable explanation for the change in position.

[63] The evidence in the record before me indicates that Nissan demanded a defence from Northbridge prior to Northbridge having completed its investigation. At the time that its defence was served, Northbridge confirmed that an amended statement of defence might be required due to the defence having been demanded prior to the completion of Northbridge’s investigation into coverage.

[64] In the case at hand, plaintiff’s counsel insisted that the defendant deliver a statement of defence prior to Northbridge completing its investigation. Thus, the statement of defence was delivered under time constraints and with imperfect information.

[65] In Hughes, supra, Master MacLeod, in considering a motion where a plaintiff was seeking inter alia to withdraw an admission in a pleading, acknowledged the reality that on occasion, practicing lawyers will make mistakes when drafting pleadings. He confirmed that it would be incongruous with the spirit of Rule 1.04(1) if parties were not permitted to correct mistakes rooted in subsequently discovered evidence. In this regard, Master MacLeod stated the following at para 8:

Pleading often has to be completed under time constraints with imperfect information and it is often the case that even the most careful counsel discovers that his or her interpretation of the information supplied by the client has been imperfect. In a perfect world, all documents would be reviewed and all witnesses interviewed before the pleadings were crafted but that is not the reality of practice. The governing principle of our rules as set out in Rule 1.04(1) is not furthered if parties are not allowed to correct mistakes in pleading if a full exploration of the facts and documents reveals them. As stated by Saunders J. in Antipas, supra "if there is a triable issue, a party should be able to withdraw an admission upon furnishing a reasonable explanation for the change in position."

[66] This sentiment was echoed in La v. Le, [1993] BCJ No. 540, para 10 where the Court stated the following:

It is to be remembered, of course, that if the courts do not permit admissions to be withdrawn when new facts are unexpectedly brought to light thereafter, parties will inevitably be discouraged from making what seem at the time to be proper admissions, to the considerable disadvantage of litigants and the administration of justice generally.

[67] When Northbridge delivered its defence, there appeared to be a valid policy in place. It was only after Northbridge completed its investigation that it ascertained that the loss vehicle had been added retroactively after it had been destroyed on June 11th 2020. Northbridge’s evidence is that it would not have provided the admission at paragraph 3 of the statement of defence if it had known at the time that the loss vehicle had been added retroactively after it had been destroyed.

[68] I am satisfied, based on the record before me that the admission was due to inadvertence and that Northbridge has provided a reasonable explanation for the change in position. Nissan demanded a defence from Northbridge at a time when Northbridge had not yet completed its investigation. The record before me contains correspondence between counsel confirming that Northbridge had advised counsel for Nissan that Northbridge would likely be amending its statement of defence upon completion of its investigation.

(c) Will the withdrawal result in any prejudice that cannot be compensated in costs?

[69] In terms of the issue of prejudice, the wording under this branch of the test is similar to the wording found in Rule 26.01.

[70] Under this third branch of the test, the Court must consider whether there is any non-compensable prejudice that flows from the proposed amendment as opposed to whether there is any non-compensable prejudice in general. Iroquois Falls v. Jacobs, 2009 ONCA 517, ¶ 20-22.

[71] Nissan argues that it has been prejudiced by the defendant’s admission that it insured the loss vehicle at the relevant time because, as a result of the admission, it elected not to sue its lessee. The affidavit of Linda Cozza filed by Nissan in response to this motion indicates that the limitation period for Nissan to sue its customer expired in August of 2022.

[72] Nissan also argues that Northbridge had made a clear admission of coverage which it is now seeking to withdraw. However, as discussed further below, I am of the view that Northbridge at no time made a formal admission of coverage. Indeed the evidence suggests that Northbridge specifically denied that coverage was available to Nissan under the policy in its statement of defence.

[73] The following evidence is relevant to a consideration of this third branch of the test:

• The statement of claim was issued on April 30th 2021. Regardless of whether the plaintiff knew or ought to have known that it did not have a valid contract with Northbridge in place, it did know at this time that it held a contract with its lessee. The lessee was contractually liable to indemnify Nissan for the loss vehicle. Despite this fact, Nissan elected not to name its lessee as a defendant in the action. This decision was made before Northbridge was served with the statement of claim.

• Northbridge served its statement of defence on June 21st, 2021 and at that time, Nissan was aware that Northbridge’s pleading was subject to change. Moreover, in its statement of defence, Northbridge denied that Nissan had any coverage for the loss vehicle. Northbridge pled that Nissan was not an insured under the policy and was not a loss payee. Prior to the expiry of the limitation period for Nissan to commence an action against its lessee, Nissan was aware that Northbridge was denying coverage to Nissan for the loss vehicle.

• Northbridge has consistently denied that Nissan is entitled to indemnification under the policy.

• Prior to the expiry of the limitation period, Jason Leung was examined on behalf of Northbridge on December 10th, 2021. Mr. Leung’s evidence confirmed that coverage was being denied under the Policy for various reasons including the following:

  • Nissan is not a loss payee under the policy. (Leung transcript pages 18 and 19)
  • The loss vehicle appears to have been added to the Policy after the accident date of June 11th 2020 (Leung transcript, pages 20 and 21)
  • The vehicle was not permitted to be rented out for more than 30 days. (Leung transcript, page 21)
  • Nissan is a stranger to the Policy. (Leung transcript, page 18)

[74] At page 26 of the transcript, counsel for Nissan confirmed at the December 10th, 2021 examination for discovery of the Northbridge representative that he was aware that there were coverage issues.

[75] Nissan argues that on December 9th, 2021, on the eve of examinations for discovery, Northbridge made a second admission, namely that the only issue was priority, not coverage. Northbridge denies that this was an admission and further argues that if it was an admission, it was an informal admission that is not binding and does not require leave of the court to withdraw. (1588440 Ontario Ltd. v. Allianz Insurance Co. of Canada, 2007 CarswellOnt 3972).

[76] Northbridge further argues that this alleged admission must be considered in the context of a consideration of all of the evidence given by Mr. Leung at his examination for discovery which Northbridge maintains clearly confirms that denial of coverage was being maintained by Northbridge.

[77] Nissan argues that it has been prejudiced by the defendant’s admission that it insured the loss vehicle at the relevant time because, as a result of the admission, it elected not to sue its lessee. Nissan’s position is that the applicable limitation period expired likely expired in August of 2022.

[78] Based on the record before me, I find that Northbridge’s position in this litigation has been consistent throughout in terms of its denial that Nissan is entitled to recovery under the Policy. While the reasons for the denial were more clearly articulated prior to Northbridge’s continued examination for discovery, the denial of coverage to Nissan has been consistent from the time that Northbridge delivered its pleading in June of 2021, which was well prior to the expiry of the August 2022 limitation period. Moreover, while counsel for Northbridge provided an email and Autoplus report to plaintiff’s counsel on December 9th, 2021 which suggested that Aviva had priority over Northbridge, I agree with the position of Northbridge that this email exchange is not a formal admission of coverage and must be considered in the context of all of the evidence including the evidence given by the Northbridge representative on December 10th 2021, which clearly maintained an off-coverage position vis-à-vis Nissan.

[79] If I am incorrect in this finding, I also accept Northbridge’s position that if this is considered an admission, it was an informal admission that is not binding as it is overcome by other evidence. Moreover, because it would be considered an informal admission, it does not require leave of the court to be withdrawn. (1588440 Ontario Ltd. v. Allianz Insurance Co. of Canada, 2007 CarswellOnt 3972, paras 34 and 36).

[80] It is also significant that in February of 2022, Northbridge delivered a letter to counsel for Nissan which clearly articulated that coverage was being denied and further outlined the reasons for the coverage denial.

[81] Northbridge at no time made any admissions that Nissan was an insured under the Policy. Indeed, the admission in paragraph 3 of Northbridge’s statement of defence relates to an admission that the loss vehicle was insured under the Policy with the named insured being Legends Car Rental Inc., who as noted is a not a party to this action.

[82] In my view the admission which is being sought to be withdrawn does not change the complexion of the case vis a vis Nissan and is not causally connected to Nissan’s failure to add its lessee as a party to the action.

[83] The evidence that Merit failed to add Legends and Nissan to the Policy when requested to do so in 2019, was known to Nissan prior to the expiry of the limitation period to commence proceedings as against Merit and its lessee. Indeed, Nissan did commence a claim as against Merit but opted not to commence proceedings as against its lessee.

[84] Moreover, in its statement of defence, Northbridge denied that Nissan had any coverage for the loss vehicle and Northbridge specifically pled that Nissan was not an insured under the Policy and was not a loss payee. Therefore, in the event that there was coverage under the Policy and the lessee chose not to reimburse Nissan any of the monies paid by Northbridge pursuant to the Policy, Nissan could not compel its lessee to reimburse it in the absence of an action that included the lessee. Despite this, Nissan still chose not to commence a claim against its lessee.

[85] I am satisfied that Nissan will not suffer prejudice if the admission is withdrawn and the amendment is permitted. Well prior to the expiry of the relevant limitation period, Northbridge clearly communicated that it was denying coverage to Nissan and Nissan made a decision not to pursue an action as against its lessee.

Disposition and Costs

[86] In the result, Northbridge’s motion to amend its statement of defence to withdraw the admission is hereby granted.

[87] After the hearing of the motion, both parties agreed that regardless of the outcome of the motion no costs would be sought by either party. Therefore no costs shall be ordered payable by or to any party.

ASSOCIATE JUSTICE G. ECKLER DATE: July 18, 2024