Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: VASUKI RAVICHANDRAN and ANOJ RAVICHANDRAN, Plaintiffs
AND:
ASIF ALI, ENTERPRISE RENT-A-CAR CANADA LIMITED and ZENITH INSURANCE COMPANY, Defendants
AND:
122857 ONTARIO INC., carrying on business as METROWIDE MARKETING AND DISTRIBUTION LTD., METROWIDE DISTRIBUTING LTD., METROWIDE MARKETING AND DISTRIBUTION, METROWIDE MEDIA, CHARIOT INC. and BENJAMIN CHLADNY, Third Parties
BEFORE: Leiper, J.
COUNSEL: Ryan M. Naimark, for the Plaintiffs
L. Russell Hatch, for the Defendants, Asif Ali and Enterprise Rent-A-Car Canada Limited
Stephen Walsh, for Third Parties, 1228527 Ontario Inc., carrying on business as Metrowide Marketing and Distribution Ltd. and Benjamin Chladny
HEARD: April 16, 2026
ENDORSEMENT
1The defendants, Asif Ali (“Mr. Ali”) and Enterprise Rent-A-Car Canada Limited (“Enterprise’) bring a motion to determine which of two motor vehicle liability policies must respond to the plaintiff’s claim for personal injury damages, after a motor vehicle collision involving a rental vehicle. That question turns on the identity of the lessee of the rental vehicle.
2The relief sought is by way of declarations as follows:
(a) An Order granting leave to the defendants Asif Ali (“Ali”) and Enterprise Rent-A-Car Canada Company (“Enterprise”) to correct the name of the Third Party from 122857 Ontario Inc. to 1228527 Ontario Inc., along with appropriate amendments to the allegations as set out in the Amended Third Party Claim;
(b) A declaration that 1228527 Ontario Inc., carrying on business as Metrowide Marketing and Distribution (“Metrowide Marketing”) and/or Benjamin Chladny (“Chladny”) were, for the purposes of s. 277(1.1) of the Insurance Act R.S.O. 1990, c. I.8, the renter(s) of a 2018 Dodge Ram ProMaster 2500 motor vehicle bearing Ontario license plate number AW 91706 (“the Enterprise vehicle”) owned by Enterprise at the time of a collision involving the Enterprise vehicle on June 14, 2018.
(c) A declaration that Metrowide Marketing and/or Chladny are liable to the plaintiffs for any loss or damage the plaintiffs sustained arising from any negligence on the part of Asif Ali in his operation of the Enterprise vehicle on or about June 14, 2018;
(d) A declaration that the Certas Home and Auto Insurance Company (“Certas”) motor vehicle liability policy issued to Metrowide Marketing bearing policy number XA31O940 (“the Certas Policy”) shall respond in priority to the motor vehicle liability insurance policy issued to Enterprise in respect to any liability arising from the negligent operation of the Enterprise vehicle on or about June 14, 2018;
(e) An order that if the plaintiffs obtain judgment against Ali and Enterprise for the damages the plaintiffs sustained in the June 14, 2018, motor vehicle collision, Ali and Enterprise are to be indemnified for the full amount of that judgment by Metrowide Marketing and/or Chladny.
3The third parties’ position on the substance of the motion is that the lessee of the rental car and contracting party with Enterprise was Chariot Inc. (“Chariot”) in whose name the rental account was opened. The defendants submit that Chariot was in an agency relationship to the true lessee, 1228527 Ontario Inc., carrying on business as Metrowide Marketing and Distribution (“Metrowide”). This is the company that employed the driver, Mr. Ali, on the day of the collision, and whose principal, Mr. Chladny, paid for the rentals from time to time for Metrowide’s business which was the delivery (using rental vehicles) of flyers and magazines in Toronto.
4The third parties agree that if they are found to be the lessee(s) of the rental car, that their insurance policy is available and will respond to the claim.
5The third parties, Mr. Chladny and Metrowide submit as a preliminary matter, that this motion ought to have been brought by way of an application. They did not seek a ruling on that point or object to the issue being argued by way of a motion. I note their objection. Nevertheless, I find it appropriate to deal with the issues as framed by way of motion.
6According to their notice of motion, the defendants’ motion is brought pursuant to the Rules of Civil Procedure: 1.04(1), 2.01, 5.04(2), 20.0, 21.01(a), 26.01 and 26.02.
7The defendants have cited Rule 1.04 (1) and Rule 2. 01 which support determining this question on the motion, even if there is some irregularity on how it has been framed.
8Rule 1.04 provides that:
1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
9Rule 2.01 (1) provides that “A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court,
(a) may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute; or
(b) only where and as necessary in the interest of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part.
(2) The court shall not set aside an originating process on the ground that the proceeding should have been commenced by an originating process other than the one employed.
10While the issue on this motion could have been brought by application, it is practical and expeditious to decide the matter on the material filed in the context of a motion. I am guided by Rules 1.04 and 2.01 in that regard. This will be practical, given that the trial is scheduled for October of 2026. Form does not need to overwhelm substance.
11For the reasons that follow, I find that the lessee of the rental vehicle that was involved in the collision was the third party, 1228527 Ontario Inc., carrying on business as Metrowide Marketing and Distribution. I grant the request to correct the number in the title of proceedings to 1228527 Ontario Inc. on an unopposed basis.
Background
12This action arises from a motor vehicle collision that occurred at 4:08 a.m. on June 14, 2018, in Toronto. The defendant, Mr. Ali, was driving a cargo van, rented from Enterprise the day prior to the accident. Mr. Ali drove into the intersection at Markham Road and Ellesmere Road, in Toronto, where he collided with the plaintiff’s vehicle, a Honda Civic.
13At the time of the collision, Mr. Ali was working for the third party 1228527 Ontario Inc., carrying on business as Metrowide Marketing and Distribution (“Metrowide”). He was a driver who delivered magazines and flyers on behalf of Metrowide. Mr. Chladny was the sole owner and directing mind of Metrowide (Mr. Chladny has since retired.).
14However, the corporate rental account agreement used when Mr. Ali signed out the cargo van, was signed on August 30, 2013, and under the name of Chariot, an affiliated company to Metrowide with Mr. Chladny shown as the authorized signatory for Chariot. On the face of the account, the “renter name” is shown as “All employees of Chariot.” The address given on the account is 12895 Humber Station, Bolton, Ontario (the “Bolton address”). The corporate records for both Chariot and Metrowide show they share the same address in Woodbridge. The corporate search for Metrowide identifies the Bolton address as Mr. Chladny’s home address.
15Mr. Chladny was the sole owner and directing mind of Chariot, which had been inactive for 8 years at the time of the collision. In his evidence on discovery, Mr. Chladny confirmed that Chariot had been inactive since 2010 and was not carrying on business at the time of the collision. Mr. Chladny also agreed that he failed to notify Enterprise of this fact.
16The rental documentation that applied to the date of the collision included a “rental ticket” which included “Renter Information” that showed “Chariot, All Employees.” The address was shown as Mr. Chladny’s home address, and not Chariot’s corporate address. Under another section of the ticket, a field entitled “Rate Source Name” is filled in as “Metrowide Marketing”. In the notes section of the rental ticket, the information listed for June 22, after the collision includes a note that reads, “the cardholder name is Ben Chladny, but the renter name is All Employees Chariot.”
17Similarly, in the rental agreement dated June 13, 2018, the company renter is named as “Chariot All Employees”. On the signature line, Mr. Ali signed as the “Renter’s Representative.”
18Mr. Chladny testified that he hired contractors to deliver newspapers and flyers for Metromedia. He authorized those contractors to rent vehicles from Enterprise under the corporate account that he had opened. His practice, which he followed with Mr. Ali, was to accompany them to Enterprise’s offices, introduce them and provide his authorization for them to rent vehicles under the corporate account.
19Mr. Chladny testified that he thought he had made the rental contract with Enterprise as between Enterprise and Metrowide.
20After the collision that is in issue here, on November 11, 2018, the parties changed the rental vehicle corporate agreement and replaced Chariot with Metrowide. Metrowide continued to rent vehicles from Enterprise until 2020 when Mr. Chladny retired.
21The collision occurred at 4:50 a.m. on June 14, 2018. Mr. Ali was driving to a printer in Scarborough to pick up bundles of magazines and distribute them to locations in Toronto.
22At the time of the collision, Metrowide and Mr. Chladny were insured under an automobile insurance policy issued by Certas Home and Auto Insurance Company in the name of State Farm. The liability limits are $1,000,000. The insurance policy is a standard Ontario Automobile Policy (OAP 1). The Certificate of Insurance provides that the use of vehicles under the insurance policy was for “newspapers/magazines delivery.”
23Chariot did not carry insurance at the time of the collision. Mr. Ali did not have his own insurance policy.
24At the time of the collision, the Enterprise vehicle was insured under motor vehicle liability policy number CAC301712 issued by Chubb Insurance Company of Canada. It had a policy period from September 1, 2017, to September 1, 2018. The policy covered all vehicles owned by Enterprise.
25The sole issue on this motion is who was the lessee of the rental vehicle? The parties agree that the answer to that question will determine which insurance company must respond to the plaintiff’s claims.
The Legal Framework
26The Insurance Act, R.S.O. 1990, c. 1.8, as amended, determines the priority in which the motor vehicle liability policies of the driver, renter and owner of a rental vehicle must respond to the plaintiff’s claims. Section 277(1.1) is the operative section and provides:
(1.1) Despite subsection (1), if an automobile is leased, the following rules apply to determine the order in which the third party liability provisions of any available motor vehicle liability policies shall respond in respect of liability arising from or occurring in connection with the ownership or, directly or indirectly, with the use or operation of the automobile on or after the day this subsection comes into force:
Firstly, insurance available under a contract evidenced by a motor vehicle liability policy under the lessee of the automobile is entitled to indemnity as an insured named in the contract.
Secondly, insurance available under a contract evidence by a motor vehicle liability policy under which the driver of the automobile is entitled to indemnity, either as an insured named in the contract, as the spouse of an insured named in the contract who resides with the insured or as a driver named in the contract, is excess to the insurance referred to in paragraph 1.
Thirdly, insurance available under a contract evidenced by a motor vehicle liability policy under which the owner of the automobile is entitled to indemnity as an insured named in the contract is excess to the insurance referred to in paragraphs 1 and 2.
27Section 267.12 of the Insurance Act caps a lessor’s liability. Subsection (3) limits such liability to $1,000,000. Such amount is, under s.267.12(1), reduced by any amounts recovered from the renter or driver, subject to the applicable exceptions as specified under subsection (4).
28Section 267.12(6) of the Insurance Act provides:
“lessor” means, in respect of a motor vehicle, a person who is leasing or renting or leasing the motor vehicle to another person for any period of time, and “leased” has a corresponding meaning;
29The Court of Appeal indicated in 2010, that the amendments to the Highway Traffic Act, Insurance Act and the Standard Ontario Automobile Policy (“O.A.P. 1”) were to make renters liable for damages sustained by reason of negligence in the operation of a rented vehicle, and to relieve the insurer of the owner of the rented vehicle from being the first-loss insurer where other insurance is available to the renter or driver of the rented vehicle: See Enterprise Rent-A-Car Canada Ltd. v. Meloche Monnex Financial Services Inc., 2010 ONCA 277 at para. 4.
30The question that the court must determine is the identity of the first loss insurer under s. 277(1.1), recognizing that the parties to the contract are not always those named or who have signed the contract, although “typically” the contracting parties are as shown on the rental agreement: See Aviva Insurance v. Wawanesa Mutual, 2019 ONCA 704 at paras. 4, 29.
31Depending on the circumstances, the court may apply principles of agency where the surrounding circumstances and the fact of the agreement indicate that a signatory was doing so on behalf of another person: Aviva Insurance v. Wawanesa Mutual, at paras. 27-29.
32For example, where an employer authorizes an employee to contract with a rental agency on its behalf, this raises a relationship of agency. The fact that an employee signs a rental contract is not necessarily evidence that they are the renter. A corporation can only “sign” a contract through an authorized representative: Aviva Insurance v. Wawanesa Mutual, 2019 ONCA 704 at para. 28
33The Court of Appeal confirmed in Aviva, that although the contracting parties will typically be identified by ascertaining the identities of the signatories to a rental agreement, in situations where an agency relationship is raised, it may be necessary to go beyond the four corners of a rental agreement to understand the identities of the actual contracting parties: Aviva Insurance v. Wawanesa Mutual, 2019 ONCA 704 at para. 29. The Court of Appeal quoted with approval from The Law of Contract in Canada, 6th ed (Toronto: Thomson Reuters, 2011) at p. 192:
Under the law of agency, a principal may contract with another party through an agent. In such circumstances, even though the contract is negotiated between the agent and the third party (and may even be signed by the agent, not the principal), the contract which comes about is held to be between the principal and the third party, not the agent and the third party…. [Ordinarily,] the principal, on whose behalf the agent contracts, is the one entitled to take the benefit of the contract so negotiated, as well as being the one liable in the event of default.
Analysis
34In applying these agency principles to the rental relationship and the contract at issue in Aviva, the Court of Appeal found that it was an error to look only at the rental contract. In the facts on that case, the Court of Appeal considered all of the circumstances and applied them to the question of who the true lessee was. I review those here and apply them to the case at bar:
(a) If an employee rented the vehicle, who were they renting it for? In Aviva, the employee was renting it for his employer, “Fine Furnishings”. Applying this question to the case at bar, the corporate account was in the name of Chariot, and Mr. Ali was shown as renting the vehicle as an “employee for Chariot”, a defunct corporate entity. In fact, Mr. Ali was renting the vehicle to do his work for Metrowide;
(b) Did the employee have the ability to use the vehicle for any other purpose? In Aviva, the answer was no. In the case at bar, the only evidence on use was that the vehicle was rented for delivery of newspapers and flyers on behalf of Metrowide, because as Mr. Chladny said in his examination, Chariot was not active in 2018;
(c) Who paid for the rental? In Aviva, “Fine Furnishings” paid for the rental. Here, the principal of Metrowide, Mr. Chladny, paid for the rental. Given his evidence that Chariot had been inactive for years, it cannot be said that Mr. Chladny was paying for the rental on behalf of Chariot.
35The third parties submit that the facts in the case at bar are distinguishable because on the face of the account, Enterprise was contracting with Mr. Chladny’s corporation, Chariot. This means that Chariot was the clear counter-party, the lessee and it cannot be said that Metrowide was the principal behind Chariot’s agent. When Mr. Ali signed for the rental on June 13, 2018, he signed as authorized for the name of the counterparty on the corporate rental account, which was in the name of Mr. Chladny’s other (dormant) corporation, Chariot.
36In applying the agency principles excerpted above from Aviva, I find that Mr. Ali, the driver was a contractor to Metrowide when he completed the rental agreement for the rental on June 13, 2018. He did so under the account in the name of a dormant company, on the evidence. Mr. Chladny paid for the rental for the purposes of the business of Metrowide. Metrowide’s name appears on the rental ticket, as well as Chariot as the original party to the corporate account.
37I conclude that the true lessee on these facts was Metrowide and not Chariot.
Conclusion
38I resolve this motion in favour of the defendants.
Costs
39The parties were not able to agree to costs but are content to have their costs outlines and submissions therein applied to the question of costs. I have considered the factors applicable to costs and conclude that the successful parties should have their partial indemnity costs fixed in the amount of $20,000. This matter was moderately complex, and the question is of high significance to the parties as it resolves a crucial question. The motion took one day to argue. There is no basis on which to award more than partial indemnity costs.
Leiper, J.
Date: May 26, 2026