Douglas v Aviva Canada Inc., 2026 CanLII 48310 (ON SCSM)

COURT FILE NO.:SC-23-00002540-0000

DATE: April 20, 2026

ONTARIO

SUPERIOR COURT OF JUSTICE

SMALL CLAIMS COURT

BETWEEN:

michael douglas

Plaintiff

– and –

AVIVA CANADA INC. and TRADERS GENERAL INSURANCE COMPANY

Defendants

Christopher Lee and Lauren Tzogas

Counsel for the Plaintiff

Gavin Fior

Counsel for the Defendants

HEARD at Richmond Hill: January 28, 2026 and April 10, 2026

REASONS FOr JUDGMENT

Deputy Judge A. Deveaux

I. Introduction

1This trial arises from a policy for insurance between the Plaintiff and Defendants over the Plaintiff’s motor vehicle, a used 2020 Toyota Highlander (“First Vehicle”). The matter was tried over two days. The Plaintiff testified on his own behalf and Ms. Stephanie Ricciotti (“Ms. Ricciotti”) testified on behalf of the Defendants.

2The Plaintiff claimed damages in the amount of $35,000.00 for breach of contract, breach of duty of good faith and honest performance, and negligence. The Defendants deny any liability both in contract and tort. At the conclusion of the trial, in closing submissions, the Plaintiff withdrew his cause of action in negligence. The Defendants took no issue with the late withdrawal, but costs, if any, attributed to the late withdrawal of the cause of action will be addressed in costs submissions.

3At the onset of the trial, the following documents were entered into evidence:

a. Exhibit 1 – Plaintiff’s Trial Brief;

b. Exhibit 2 – Plaintiff’s supplementary Trial Brief;

c. Exhibit 3 – Plaintiff’s further supplementary Trial Brief;

d. Exhibit 4 – Defendants’ Document Brief

e. Exhibit 5 – Defendants’ Supplementary Document Brief.

II. Undisputed Facts

4There is no dispute between the parties as to the following facts.

a. The Plaintiff had a valid insurance policy with the Defendants covering the First Vehicle, which was stolen from the Plaintiff’s driveway on December 21, 2022. On the same date, the Plaintiff submitted a claim to the Defendants for the loss. On January 4, 2023, the Plaintiff purchased a new 2020 Toyota Highlander (“Second Vehicle”). This vehicle was also insured with the Defendants on January 3, 2023.

b. On or about January 11, 2023, the police located and recovered the First Vehicle. The Defendants were advised that the vehicle was located on January 13, 2023.

c. As part of the insurance policy, the Plaintiff was entitled to rental vehicle coverage. The Plaintiff utilized the rental coverage until January 4, 2023. No request to extend rental coverage was submitted by the Plaintiff to the insurer.

d. The Carfax report for the First Vehicle designated it as a total loss. A Carfax report is a detailed, VIN-specific document outlining a used vehicle's history, including accident damage, ownership, service records, and title issues.

e. The First Vehicle was repaired by Carstar Collision and Glass Service (“Carstar”). The repairs on the First Vehicle were completed in July 2023.

III. Plaintiff’s Evidence

Direct Examination

5The Plaintiff testified that on the morning of December 21, 2022, his family awoke to find that their First Vehicle had been stolen from their driveway. His wife, Mrs. Briglio, immediately contacted their insurer the Defendants to notify them. A police report was also filed. The Plaintiff and his wife were told by the Defendants that their coverage included rental coverage up to a maximum of $1,200.00 and that coverage would end on the earlier of the Defendants making a cash settlement offer or the maximum allowable amount was reached.

6Shortly after, Ms. Ricciotti was appointed to the Plaintiff’s claim as the adjuster. Ms. Ricciotti requested the Bill of Sale, the keys, and ownership and confirmed the maximum allowable amount for rental coverage. The Plaintiff testified that, given the coverage amount, his family had to rent a smaller vehicle due to the daily costs of the rental. This impacted his family as they were unable to travel with their large dog, and wife’s equipment work her work, etc. due to the size of the rental vehicle.

7Given the limited amount of coverage and fear that it would run out prior to any settlement from the Defendants, the Plaintiff began looking to secure a replacement vehicle. The family wanted to replace the First Vehicle with the same make and model, as it had served them well. They were able to secure the Second Vehicle in Cobourg, Ontario. and went to pick it up on January 4, 2023. The cost of the Second Vehicle was $69,531.61.

8Prior to picking up the Second Vehicle, the Plaintiff contacted the Defendants to transfer the insurance coverage. The Plaintiff testified that when speaking to the Defendants, he advised them that their vehicle had been stolen and a replacement vehicle was purchased. The Defendants did not raise any issue with the replacement of the vehicle at this time.

9The Plaintiff contacted Ms. Ricciotti by email and informed her of the replacement vehicle and that the rental coverage was no longer needed. Again, no issue was raised by Aviva regarding the purchase of the Second Vehicle. In fact, on January 5, 2023, Ms. Ricciotti confirmed via email that all documents had been sent to the appraiser and that once they received the report, Aviva would provide a settlement.

10Then the unlikely happened. On January 11, 2023, the First Vehicle was found by police. Apparently, it had involved in a high-speed chase during which it crashed into a construction site. When the Plaintiff learned of this, he contacted Ms. Ricciotti. She indicated to him that this was an unusual situation and would need to speak to her superiors as to next steps.

11On January 13, 2023, the Plaintiff received an email from Aviva declaring that the First Vehicle was deemed to be a total loss and that they had decided not to repair it. The email stated that the vehicle was currently located at 214 Monarch Park Avenue, Toronto, Ontario, which was the Plaintiff’s address. Knowing that this information was incorrect, the Plaintiff contacted Ms. Ricciotti to advise that the reference to the First Vehicle being located at his residence was incorrect. On the same day, Ms. Ricciotti replied, stating:

“Hi Mr. Douglas

I apologize for the confusion, this was an automated email that was sent based on the original details of your claim. Now that the vehicle has been recovered we are taking the steps necessary to have the vehicle physically appraised and we will follow up regarding next steps once we have the appraiser’s report back.”

12The Plaintiff testified that his interpretation of this email was that the confusion related to the First Vehicle location and the settlement process was still underway. Ms. Ricciotti provided a different interpretation of this email, which I will address later in her evidence summary.

13The Plaintiff testified that his wife attended at the Carstar body shop on January 31, 2023, to inspect the First Vehicle at the Defendants’ request. His understanding was that the inspection was being conducted to confirm the vehicle was in fact theirs and to collect any personal belongings from the vehicle. After this date, the Plaintiff did not hear from the insurer again until March 7, 2023, when they advised that the First Vehicle had been approved for repairs and that the repairs would be undertaken. Ms. Ricciotti advised in this March 7, 2023, email that repairs were expected to be completed by March 16, 2023.

14The Plaintiff first heard from Carstar on June 5, 2023, when they reached out for repair approval. The repairs were completed by mid-July 2023. The Plaintiff did not pick up the vehicle until October 2023, as he was concerned that doing so might impact his potential litigation against the insurer. The Plaintiff then found himself with two 2020 Toyota Highlanders. Mr. Douglas attempted to sell the First Vehicle himself, but found it challenging, given that the Carfax report had the vehicle designated as a total loss. He only received one offer on the vehicle for $37,500.00 from a dealership, which he ultimately accepted.

Cross-Examination

15On cross-examination, the Plaintiff testified that he was not aware that a proof of loss had to be filed with the insurer. He stated he was not provided with this documentation. When directed by Defendant’s counsel to the email from the Defendants’ dated December 24, 2022, which included a link to a proof of loss, he admitted that he did not see this in the email. However, the Defendants had processed the claim without it and did not follow up on any requests for the proof of loss.

16The Plaintiff was directed to a voice recording of the initial call between his wife and Ms. Ricciotti on December 23, 2022. Upon reviewing the recording, the Plaintiff admitted that there was no mention on the call about the purchase of a replacement vehicle, that there was no inquiry made about the possibility of extending rental coverage. He admitted that they were informed recovery of the First Vehicle was possible, and with the impending holidays, resolution may be delayed.

17When questioned about the Carfax report, the Plaintiff admitted that when he learned of the total loss designation, which he alleges impacted the value of the vehicle, he did not make any inquiries with the Defendants to have this rectified.

IV. Defendants Evidence

Direct Examination

18Ms. Ricciotti has been employed by Sedgwick CMS Canada Inc. (“Sedgwick”) as an insurance adjuster for four years. Sedgwick handles claims submitted by insurers to the Defendants. At any given time, she manages between fifty and one hundred files. She received the complaint file on December 23, 2023, after the claim was initiated by the Plaintiff to the Defendants.

19She testified that during her first contact with the Plaintiff’s wife, she advised that the hope in a theft situation was that the First Vehicle would be recovered, and if it was not, a cash settlement would be offered on a blind appraisal. She informed the Plaintiffs wife that the maximum limit under the policy for rental coverage was $1200.00. She further advised her that the rental coverage would expire on the earlier of the limit beach reached, a settlement offer being made, or the repairs being conducted.

20She first learned that the Plaintiff had purchased the Second Vehicle on January 4, 2023, when she received the email from him requesting the rental car coverage to be extended until the end of the day. At that time, the Plaintiff had approximately half of the rental coverage remaining. She testified that she did not advise the Plaintiff or his wife that they should not have purchased a new vehicle until the claim was settled. However, had they asked her opinion prior to purchasing, she would have advised them to wait.

21Her next communication with the insured was on January 13, 2023, when she was informed that the First Vehicle had been recovered. She learned that the First Vehicle had been recovered on or about January 10, 2023, and had been involved in a high-speed chase with police and was currently at the police impound lot.

22She advised the Plaintiff’s wife that they would arrange for towing and appraisal of the vehicle to determine whether it was safe to return. She admits that on the same date, the Defendants sent an autogenerated email to the Plaintiff declaring that the First Vehicle was declared a total loss. However, when the Plaintiff emailed her regarding the message, she promptly replied that the email was sent in error and that steps were being taken to have a physical appraisal completed. She could not recall which date the vehicle had been recovered from the tow yard for inspection.

23On March 7, 2023, she advised the Plaintiff that repairs had been approved and that the vehicle was currently at the dealership to have electronics repaired, after which it would be sent to the body shop for repairs. The repairs were ultimately completed in July 2023.

24Ms. Ricciotti testified that the delays were not attributed to the Defendants and that she believed the delay in repairs was due to backlogged parts. In such an instance, if the Plaintiff had maxed out his rental coverage prior to the repairs being completed, then the Plaintiff would have been responsible for rental and transportation charges over and above the maximum limit of $1,200.00.

25The witness admitted that after the communications with the Plaintiff on March 8, 2023, she did not respond to further communications from the Plaintiff.

26At the end of March 2023, the Ombudsman became involved. She was aware of the communications between Mr. Douglas and the Ombudsman but was not involved as she was on extended leave at the time.

Cross-Examination

27On cross-examination, Ms. Ricciotti admitted that the January 13, 2023, email declaring the First Vehicle as a total loss was sent because someone at the Defendants had determined that the vehicle was a total loss. She herself did not make this determination. She agreed that as of that date, the vehicle had been declared a total loss and Aviva had opted not to repair, but that this decision had been based on the vehicle being stolen. When the First Vehicle was recovered, the Defendants decided to pivot and ultimately elected to repair the vehicle.

28In making her decision to repair to the First Vehicle once recovered, she testified that she relied on section 7.6 of the Ontario Automobile Policy – Owners Policy (“OAP 1”), which was communicated to the Plaintiff on March 7, 2023. When pressed by counsel, she agreed that on March 7, 2023, it had been more than seven days since the claim had been submitted by the Plaintiff. She further agreed that the provision of 7.6 does not state that if circumstances change, then the time allotted to elect to repair restarts. When asked whether the Defendants ever withdrew the total loss designation made on January 13, 2023, she testified that that when the election to repair was made, this meant that the First Vehicle was not a total loss.

29When asked about the Carfax report, she confirmed that it showed the First Vehicle had been declared a total loss, but that the Plaintiff never requested for that designation to be removed from the report. Had the Plaintiff made that request, the Defendants could have attempted to fix it.

Ombudsman report

30The dispute was referred to the Ombudsman in late March 2023. A final report from the Ombudsmen was issued on June 26, 2023. The finding was in favour of the Defendants, and the report relied on provision 8.6(6) of the OAP 1 and the Plaintiff’s failure to provide a proof of loss. The report stated that the Plaintiff should not have purchased a new vehicle until a settlement had been reached between the parties. The Ombudsman further found that if the proof of loss had been provided, the Defendants’ liability would be limited under section 8.6 (5) of the OAP 1 to the lesser of the value of the repairs or actual value.

V. The Issues

31The issues raised in this proceeding are as follows:

a. Did the Defendants breach the contract of insurance?

b. Did the Defendants have a duty of good faith and honest dealing to the Plaintiff, and if so, was that duty breached?

c. If either of the above is answered in the affirmative, what is the quantum of damages, if any.

1. Breach of Contract

32The Plaintiff alleges that the Defendants breached the contract of insurance by:

a. Failing to elect to repair within seven days;

b. Failing to repair the vehicle within a reasonable time; and

33A breach of contract exists where one party fails, without lawful excuse, to perform a term or obligation that forms part of the agreement. The existence of a breach depends on there being a valid and enforceable contract, a specific obligation, a failure to perform that obligation, and a resulting loss or damage to the non-breaching party. Damages in breach of contract are intended to place the innocent party in the position they would have been had the contract been performed.

34The contract in question is the policy of insurance A21512028PLA, effective August 23, 2022. In addition to the contract itself, both the insurer and the insured are subject to the OAP 1. The OAP 1 is established under the Insurance Act, R.S.O. 1990, c. I.8, and as included by reference into all automobile insurance policies in Ontario.

35The OAP 1 is a contract mandated by statute. Neither the insured nor the insurer can contract out of, alter, or amend its terms. As such, the appropriate analysis to be undertaken in reviewing such a contract is not that of ordinary contractual interpretation but rather is akin to statutory interpretation: see Zheng v. Certas Home and Auto Insurance Co., 2019 ONSC 2753, at para 35. However, this does not displace some of the established rules of contractual interpretation. The Supreme Court of Canada has held that the words in insurance contracts must be given their plain and ordinary meaning and that the OAP must be construed as it would be understood by the average person applying for insurance: see Co-operators Life Insurance Co. v. Gibbens, 2009 SCC 59, [2009] 3 SCR 605, at para. 21.

The Statutory Trump Card

36The Plaintiff submits that the applicable provision of the OAP 1 is section 7.6. The Defendants submit that the applicable provision is section 8.6 (6) and that in the event of an inconsistency, this section prevails. Both provisions deal with the insurer’s right to elect to repair the vehicle, which must be made within seven days. However, in section 7.6 the time begins to run from the delivery of the notice of claim. In section 8.6 (6), the time begins to run from the delivery of the proof of loss. I find that section 8.6 (6) prevails over section 7.6. Section 8.6 (6) is a reiteration of Ontario regulation 777/93 under the Insurance Act. There is no question that legislation prevails over contractual terms. Further, the OAP 1 at section 8 specifically states that, in the event of an inconsistency, it shall prevail.

37Section 8.6 (6) reads:

Repairing, rebuilding or replacing property damaged or lost

(6) The insurer may repair, rebuild or replace the property that is damaged or lost, instead of making the payment referred to in statutory condition 9, if the insurer gives written notice of its intention to do so within seven days after receipt of the proof of loss.

38The Plaintiff submits that the Defendants failed to elect to complete repairs within the seven days stipulated. In doing so, it was thereby bound to pay the damages for the vehicle in lieu of repair. It is irrelevant whether the vehicle was in the possession or control of either party. He submits that the wording of the section is clear.

39The Defendant’s submissions are three-fold:

• Firstly, it would be impossible to elect to repair a stolen vehicle within seven days of a proof of loss. To interpret the section to impose an obligation on an insurer to make such an election within that time would result in a public policy implication that would necessitate the insurer to elect immediately without knowing the particulars of the claim which arguably would increase premiums of insurance for the greater population. The Defendants further submit that this interpretation runs afoul to the modern principles of statutory interpretation.

• Secondly, they submit that the election was made on December 23, 2022, when Ms. Ricciotti advised the Plaintiff’s wife that if the vehicle was recovered, the Defendants may opt to repair it.

• Finally, they submit that the time to make the election never commenced as the Plaintiff never submitted a proof of loss.

Option Insufficient

40Before addressing the more complex issue of the interpretation of section 8.6(6), I will deal with the Defendants’ second and third submissions. I do not find that an election to repair was made on December 23, 2022. Firstly, Ms. Ricciotti’s comment that if the vehicle is recovered, the insurer “may” opt to repair it is not an election to in fact repair. Secondly, if I am incorrect in my finding that it was not an election, it nevertheless was not made in writing, as specifically required by section 8.6 (6) and therefore does not satisfy the statutory requirement of notice.

Sweet Relief

41Respecting the proof of loss, there is no dispute that the proof of loss was not submitted by the Plaintiff. He testified that he did not see the link in the initial email from the Defendants attaching the proof of loss form, and that no one ever asked him for a proof of loss. He had numerous communications with Ms. Ricciotti regarding documents that were required to be submitted, and the proof of loss was not one of them. Ms. Ricciotti testified that the Defendants complied with its statutory obligation to provide the proof of loss, but that in the normal course, they do not follow up or ask the insured to provide it. The Defendants simply provides the form, and the burden is placed on the insured to complete and return it.

42The Plaintiff submits that if the failure to provide the proof of loss is a bar to relief, he should be relieved from forfeiture under section 129 of the Insurance Act. Section 129 reads:

Relief from forfeiture

129. Where there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just.

43It is not uncommon for the courts to grant relief from forfeiture where there is clear evidence that the insured promptly informed of the loss, the insurer proceeded with adjusting the claim in the absence of the proof of loss, never made any inquiries or requests to provide a proof of loss and where there is no prejudice to the insurer: see Russell v. Canada General Insurance Company, 1999 36816 and Lynch Estate v Bay of Quinte Mutual Insurance Co., 2023 ONSC 3855.

44Counsel for the Defendants sought to distinguish Russell based on the facts of that case, insofar as the insurer used the absence of proof of loss to deny the claim, and, in this instance, the claim was not denied. I do not agree with counsel’s position. While the facts of the cases are different, the underlying principle remains the same: an insurer should not be permitted to use the absence of a proof of loss as a sword against an insured, particularly when no request to provide it was made, the insurer had promptly been notified of the claim, and the insured adjusted the claim without it. Further, it is worth noting that Ms. Ricciotti sent numerous emails to the Plaintiff asking for specific documents and confirmed they had received what was required to adjust the claim. There was no mention of a proof of loss as a requirement.

45The Defendants have failed to raise any prejudice they may suffer if relief from forfeiture is granted. I therefore grant Mr. Douglas relief from forfeiture in providing the proof of loss and find that the notice of claim on December 21, 2023, constituted the proof of loss.

The Ticking Clock

46Turning now to the interpretation of section 8.6(6) of the OAP 1. There is no dispute that the parties had a valid and enforceable contract. The obligation on the insurer is not the obligation to elect to repair or pay damages; that election is a right conferred on the insurer. The obligation under 8.6(6) is that if the election to repair is made, it is to be done so within seven days of receipt of the proof of loss, and the insured is to be advised of such election in writing.

47The language of section 8.6 (6) is clear and unambiguous. It does not state that the seven days begin to run from the date the stolen vehicle is located. The Defendants did not provide this court with any case law or insurance bulletin that would have the effect of amending or extending the time frame in the event a vehicle is stolen. Therefore, the words in section 8.6(6) must be given their plain and ordinary meaning as it is presently drafted.

48In applying the rules of contractual interpretation as set out in Co-operators Life Insurance Co, supra, I find that on the clear reading of section 8.6(6) of the OAP 1, the average person applying for insurance would interpret this provision as stating that if the election to repair is not made in writing within the allotted seven days, then the insured would receive the cash value of the damage. Further, I find that a reasonable person applying for insurance would understand this provision to mean that in the circumstances where a vehicle is stolen and is not recovered within the seven days allotted, they would be entitled to the damages pursuant to their policy. How can one elect to repair a vehicle and undertake repairs on a vehicle whose whereabouts are unknown?

49It was therefore reasonable for the Plaintiff to presume that after December 27, 2022, when the vehicle had not been recovered, he would be receiving a cash settlement offer from the Defendants.

50The insurer, by failing to make an election within the seven days, lost its right to do so and was thereby obligated to pay damages allowable under the policy. I find that the Defendants, in electing to repair after the allotted time prescribed by section 8.6 (6), breached the contract of insurance.

51In the event that I have erred in my analysis, and the Defendants’ interpretation of section 8.6 (6) is accepted, I nevertheless find that the Defendants breached section 8.6 (6). I will explain.

52If the Defendant’s interpretation is accepted, I find that the seven days allotted began to run from the date of recovery of the vehicle on January 13, 2023. The Plaintiff submits that no election to repair was made until April 17, 2023, when the Plaintiff was informed of such by the Ombudsmen. However, on March 7, 2023, the following email was sent to the Plaintiff by Ms. Riccotti:

“Good evening Mr. Douglas,

I received word from appraisal the supplement estimate the shop was waiting on was approved for $9255.70

I spoke to the shop and they advised that the vehicle is currently with the dealership for the oil change and the reprogramming of the electronics/fobs. Shop is hoping to have the vehicle back on Thursday so they can get the body work underway and are looking to have it completely by the 16th of March if all goes accordingly.

Thank you for your patience during this process, it is greatly appreciated”

53I find that the email contained sufficient information to satisfy the requirement that an election to repair was made. However, while the election was made, it was made nearly two months after the vehicle had been recovered by the police. This is far outside the permitted seven days. The right to elect was lost prior to it being made and the Defendants are liable for damages as a result.

The age-old question of “reasonable”

54The Plaintiff’s second claim for breach of contract is that the Defendants failed to repair the vehicle within a reasonable time under section 8.6 (6.1), which reads:

Time for repairs

(6.1) The insurer shall carry out the repair, rebuilding or replacement referred to in subcondition (6),

(a) within a reasonable period of time after giving the notice required under subcondition (6), if an appraisal referred to in subcondition (2.1) of statutory condition 9 is not carried out in respect of the claim; or;

(b) within a reasonable period of time after the insurer receives the appraisers’ determination of the matters in disagreement, if an appraisal referred to in subcondition (2.1) of statutory condition 9 is carried out in respect of the claim.

There was no appraisal conducted pursuant to section 9 (2.1); therefore, the applicable subsection is 8.6 (6.1) (a).

55There is no dispute about the reasonable time obligation on the insurer. What is in dispute is what amounts to “reasonable time.” There is limited case law on this point. However, in Maher v. Lumbermen's Mutual Casualty Company et al., 1932 349, at p. 601, the court held that what is reasonable is to be determined based on the circumstances of each case.

56I find that the time it took to complete the repairs was not unreasonable from the standpoint of the Defendants. The delays in completing the repairs were outside the Defendants’ control once the First Vehicle was sent to the shop. The internal records of the Defendants were submitted into evidence. They provide a timeline of events from the date of the complaint to when the First Vehicle was ultimately repaired.

57The records show the following timeline of event after the recovery of the vehicle by the police:

a. By January 30, 2023, the First Vehicle was with Carstar;

b. January 31, 2023, the Plaintiffs wife attended for the First Vehicle walkaround;

c. February 2, 2023, Ms. Ricciotti requested an update on the vehicle from Carstar;

d. February 3, 2023, the First Vehicle was being sent to the dealership to diagnose electronics;

e. February 10, 2023, Ms. Ricciotti followed up on progress;

f. February 16, 2023, the Defendants received preliminary estimate and photos;

g. March 1, 2023, damage estimate was received by the Defendants;

h. May 31, 2023, the Defendants followed up on the First Vehicle repair status;

i. July 6, 2023, Carstar had a final invoice

j. July 28, 2023, Carstar advised the Defendants they had called the insured two weeks prior to pick up the First Vehicle as repairs were complete.

58While diagnosing electronics and completion of the repairs took longer than one might expect, I cannot find that the Defendants are responsible for the delay. The repairs were outsourced, and it is evident from the internal records that the Defendants were conducting follow-ups and seeking status reports for the repairs. Further, the repairs were being conducted in the aftermath after the Covid-19 pandemic when both parts and labour shortages were being experienced over a multitude of industries, including automotive.

59In the event that I have erred in this finding and the time completing repairs was unreasonable, I am not satisfied that the Plaintiff has proven any damages flowing from the delay.

60The Plaintiff submitted that the Defendants deprived him and his family of their only vehicle, which was essential for employment, childcare, and daily life. In these circumstances, it was argued that a six-month deprivation constituted a significant and foreseeable hardship. I disagree. The Plaintiff had already purchased the Second Vehicle. The Plaintiff was not paying for transportation costs, such as rental vehicle, taxis, or Uber during this period. Nor did the Plaintiff suffer any loss with respect to income or other loss of use and enjoyment of the First Vehicle. In fact, the Plaintiff had been proceeding under the assumption since January 2023 that he was entitled to the cash value settlement for the First Vehicle. Therefore, the Plaintiff suffered no damages from the deprivation of the vehicle during the period for which it was under repairs.

2. Duty of Good Faith and Honest Performance

61The law is well established that an insurer under a policy of insurance has an implied obligation to deal with the claims for its insured in good faith. The duty of good faith requires an insurer to act both promptly and fairly when investigating, assessing, and attempting to resolve claims made by its insured: see Whiten v. Pilot Insurance Co. (1999) 1999 3051 (ON CA), 42 O.R. (3d) 641 (Ont. C.A.).

62What constitutes bad faith will depend on the circumstances of each case. A Court must look at the conduct of the insurer throughout the claims process to determine, in light of the circumstances, whether the insured acted fairly and promptly in response to the claim. A decision by an insurer to refuse payment should be based on a reasonable interpretation of its obligations under the policy. However, a mere refusal to pay a meritorious claim does not, in itself, constitute a breach of a duty to act in good faith: see 702535 Ontario Inc. v. Non-Marine Underwriters Members of Lloyd's London, 2000 5684 (ON CA) paras. 27-30.

63There is no hard or fast rule of what constitutes a breach of duty to act in good faith, but examples may include: denying claims without sufficient justification, paying substantially less than what is owed, withholding coverage, delays in processing claims and making misrepresentations to or misleading the insured.

What’s said is done

64On the facts before me, I find that the Defendants failed to act fairly in response to the claim, thereby breaching their duty to act in good faith.

65I find that the Defendants misled the Plaintiff with respect to the determination of his claim. A party may mislead their counterparty through action, for example, saying something directly, or through inaction, by failing to correct a misapprehension caused by their own misleading conduct: see C.M. Callow Inc. v. Zollinger, 2020 SCC 45, at para. 90

66On January 5, 2023, Ms. Ricciotti emailed the Plaintiff and advised:

“All your documents have been sent to appraisal. We will follow up once we receive their report and provide settlement”.

67Based on this correspondence alone, it was reasonable for the Plaintiff to conclude that a cash settlement was forthcoming. Then the unlikely occurred, the vehicle was recovered.

68After the recovery, on January 13, 2023, the Plaintiff received an automated email from the Defendants declaring the vehicle was a total loss, thereby solidifying his belief that a cash settlement was forthcoming. Ms. Ricciotti, in her examination in chief, testified that her email dated the same day sought to clarify that the automated email was sent in error. Yet, her email makes no reference to the “total loss” designation being an error. Her email was broad and nonspecific. In my view, it did not adequately address the total loss designation from the automated email. It was insufficient, therefore, for the Plaintiff to conclude that now the vehicle was recovered, the designation could be or was being revoked.

69On cross-examination, Ms. Ricciotti begrudgingly admitted that for the automated email to be sent, someone at the Defendants had to declare the vehicle as a total loss. She further agreed that as of January 13, 2023, someone at the Defendants had made the decision not to repair, thereby triggering the total loss designation and corresponding automated email. It was not until February 2, 2023, that the potential of possible repair was communicated by email to the Plaintiff’s wife. It was not until March 7, 2023, that the Defendants purported to make an election to repair.

70An insurer should not be permitted to “flip-flop” on its decision respecting claims when it suits them to the detriment of their insured. The insured is in a vulnerable position, dependent on an insurer when a loss occurs. This places the insurer in a position of power over the insured. An insured should be entitled to rely on the representations made to them by the insurer when adjusting the claim. They should not need to be concerned that, at any time after a decision on the claim has been rendered, the insurer can change their mind. The January 13, 2023, email declaring the vehicle as a total loss, in my view, constituted the Defendants’ decision not to repair and to pay the loss. It was reasonable for the Plaintiff to rely on this representation, and the insurer should be bound by that decision.

Communication is Key

71I further find that the Defendants failed to communicate clearly and promptly with respect to the claim. The correspondences from Ms. Ricciotti did not adequately communicate to the Plaintiff the status of their claim throughout. Most correspondences advised that the Defendants would simply provide next steps soon, with little to no information as to what was happening on the back end. The notification that the Defendants intended to repair was not given until March 7, 2023, nearly two months after the vehicle was recovered.

72So, for nearly two months, the Plaintiff had no visibility on their claim or that the Defendants intended to complete repairs. In fact, the Plaintiff heard nothing from the Defendant on the claim between February 2 and March 7, 2023. The Plaintiff was unaware of the extent of the damage to the vehicle or when repairs would be completed.

73On March 8, 16 and 24, 2023, the Plaintiff sent correspondences to Ms. Ricciotti, which she admittedly did not reply to. The matter was escalated to the Ombudsman in late March by the Plaintiff due to the Defendants’ lack of communication. It appears from the evidence that no further communication was received from the Defendants respecting the claim after March 8, 2023. All communications past that point were with the Ombudsman and the repair shop.

Can I hang my hat on that?

74A decision by an insurer to refuse payment should be based on a reasonable interpretation of its obligations under the policy: see 702535 Ontario Inc., supra at para. 29.

75The Defendants purported to rely on provision 7.6 of the OAP 1 to deny the payment of the cash settlement, instead, opting to repair. Reliance on this provision was stated by Ms. Ricciotti in her March 8, 2023, letter to the Plaintiff. Provision 7.6 provides that if an insurer elects to repair the election must be made in writing within seven days of notice of claim. It appears that the election to repair by the Defendants was made within seven days of the repair estimate received on March 1, 2023.

76The language of 7.6 of the OAP is unambiguous. It does not state that the election must be made within seven days of the appraisal report. It states within seven days of the notice of claim. To interpret otherwise would be unreasonable given the clear language. The Defendants ought to have known, given the claim was initiated in December 2022 and the vehicle was recovered in January 2023, that they were well beyond the seven days allotted. They attempted to use a provision in the standard form policy, to which they knew they were not in compliance, to avoid payment under the policy. I find this conduct not simply a misstep, misunderstanding or misinterpretation of the policy term, but rather a bad faith attempt to avoid payment under the policy.

3. Damages

77In finding liability against the Defendants, the final issue remaining is the quantum of damages. The Plaintiff submits that the quantum of the damages is the difference between the costs of the Second vehicle ($69,531.61) less the $37,500.00 he obtained on sale of the First Vehicle. He also claims for ancillary costs incurred for retaining the First Vehicle after repair. The Defendants submit that the replacement costs for the Second Vehicle and the cash value of the First Vehicle are not the same. The Defendants point out that the amount paid for the Second Vehicle is more than what the Plaintiff paid in early 2022 for the First Vehicle.

Just because you say it doesn’t make it so

78On the evidence before me I am not satisfied that the damages equate to what that the Plaintiff paid for the Second Vehicle. This bold assertion fails to take into account any differences that may have existed between the state of the First Vehicle at the time of loss and the Second Vehicle, such as mileage, wear and tear, interior finishes, existing damage, etc. While the two vehicles are the same make and model, I am of the view that the factors enumerated impact the value of each vehicle. The Plaintiff bears the burden to prove his damages.

79Neither party provided an appraisal of the First Vehicle at the time of loss. However, the internal records of the Defendants submitted into evidence indicate that the actual cash value of the First Vehicle as of January 13, 2023, was $59,740.31. I am satisfied that this amount represents the correct cash value of the First Vehicle at the time of loss.

The Damages yardstick

80The ordinary approach is to award contractual damages corresponding to the expectation interest: see Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, [2020] 2 S.C.R. 420, at para. 108. A breach of duty of good faith and honest performance attracts damages according to the ordinary contractual measure: see C.M. Callow Inc., supra, at para 107. That is, the Plaintiff should be put back in the position he would have been in had the contract and duty been performed.

81Had the Defendants fulfilled their duty to the Plaintiff, having declared the vehicle a total loss, I find that they would have been liable to the Plaintiff under the policy for the cash value of the First Vehicle at the time of loss, which was $59,740.31. This amount, of course, must be set off against the value received for the First Vehicle on sale.

Mitigation

82At trial, the Defendants argued that the Plaintiff failed to mitigate his damages. They submit that the Plaintiff could have sold the Second Vehicle, which would have yielded a higher price, thereby reducing the loss.

83While not specifically pled, the duty to mitigate arises by operation of law with respect to contractual breaches. The contractual principle that in breach of contract cases, the non-breaching party should be put back in the same position had the breach not occurred, is subject to the duty of the plaintiff to take all reasonable steps to mitigate their damages. The burden to establish a failure to mitigate rests with the Defendants. That burden is a heavy one: see Marshall v. Hall, 2025 ONSC 910, at para. 57. The duty requires reasonable steps, not perfection and is assessed on the unique facts of each case: see Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519, at para. 80.

84Not only must the Defendants discharge the onus of showing that the Plaintiff could have mitigated his loss if he had reacted reasonably, but he must also show how and to what extent that loss could have been minimized: see Janiak v. Ippolito, 1985 62 (SCC), [1985] 1 SCR 146, at para. 33. The Defendants led no evidence as to the value of the Second Vehicle (considering any depreciation value, damage, etc. since time of purchase). No evidence was presented to establish that had the Second Vehicle been sold, what price could have been achieved or that the Plaintiff’s mitigation efforts were unreasonable in the circumstances They sought only to rely on bold allegations of unreasonableness and unsupported allegations that the Second Vehicle would have sold for more. Therefore, I am not satisfied that the Defendants have met the burden upon them to establish that the Plaintiff mitigation effort were unreasonable and that a higher price for the Second Vehicle could have been achieved.

85I am satisfied that the Plaintiff made every attempt to resell the vehicle for the best possible price. It was in his interest to do so, not knowing what the outcome of any pending litigation may have been. The value of the vehicle was arguably diminished owing to the Carfax report stating a total loss designation. The Defendants allege that had the Plaintiff requested the designation be removed, they may have been able to do so, thereby placing the burden on the Plaintiff. I disagree. The Defendants made the designation, causing it to be reported on the Carfax report. If, as the Defendants claim, that they withdrew the loss designation (to which I have already ruled they did not), they ought to have taken the necessary steps to remove such designation from the Carfax report concurrently. They did not. The Plaintiff testified that between October 2023 and May 2024, he attempted to sell the vehicle and each time he was told that the Carfax report was a bar to his sale.

86Until May 8, 2024, when the First Vehicle was ultimately sold to Toyota on the Park for $37,500.00, being the only offer received. I accept the Plaintiff’s evidence that this was the best price he could achieve and find that he acted reasonably in attempting to mitigate his damages.

87I am satisfied that that Plaintiff have proven his damages in the amount of $22,240.31 as it relates to the First Vehicle.

Ancillary Damages

88The Plaintiff seeks damages for the carrying costs associated with the First Vehicle from the time of repair to sale. The Plaintiff testified that he incurred costs to park the First Vehicle until it was sold in May 2024. The parking costs equate to $654.00. He also claims for insurance coverage over the First Vehicle, which he testified was added to the existing policy. The policy entered in evidence was the original August 2022 policy and the amending policy from January 2023 when the Second Vehicle was purchased. The January 2023 policy does not show the First Vehicle being insured as a secondary vehicle.

89In closing submissions, counsel suggested that an appropriate amount to be given to this claim is $450.00. Without evidence of the actual cost incurred to add the First Vehicle back to the policy, I am not prepared to award damages for this portion of the claim. I am satisfied that the Plaintiff incurred costs of $654.00 to store the Vehicle. These costs would not have been incurred had the Defendants not breached the contract.

VI. Disposition

90For the foregoing reasons, I grant judgment in favour of the Plaintiff in the amount of $22,894.31. This judgment shall bear pre-judgment and post-judgement interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43.

91I encourage the parties to attempt to settle the costs of this action. If the parties are unable to do so, they are to appear before me on June 8, 2026, virtually, to argue the issue of costs. They are to serve and file a bill of costs prior to the attendance. If the parties do reach an agreement as to costs prior to June 8, 2026, they are to advise the court that the attendance is no longer required, and I will make a cost endorsement accordingly.

Deputy Judge A. Deveaux