Ashley Cardinal Plaintiff/Appellant - v. -, 2017 ABQB 487

Court of Queen’s Bench of Alberta Citation: Cardinal v Alberta Motor Association Insurance Company, 2017 ABQB 487 Date: 20170803 Docket: 1203 12801 Registry: Edmonton Between: Ashley Cardinal Plaintiff/Appellant - and - Alberta Motor Association Insurance Company Defendant/Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________ Introduction [ 1 ] Ashley Cardinal (the Appellant) is the plaintiff in personal injury actions for damages she sustained in a motor vehicle accident.

She appeals the August 15, 2016 decision of a Master summarily dismissing her claim against the Alberta Motor Associate Insurance Company (the Respondent). Background Facts [ 2 ] On April 16, 2010, the Appellant was a passenger in a 2000 Dodge Caravan owned by Edward Bachouti. The vehicle was

travelling on Highway 642, near Range Road 275, near Morinville, Alberta when it was involved in a single vehicle accident. At the timeof the accident, the vehicle was being operated by Bradley Paul. In oral argument, the Appellant did not take issue with affidavitevidence to the effect that Bradley Paul did not have consent to drive the vehicle. [3] The Appellant, who was catastrophically injured in the accident, was 16 years old and was living as a dependent with hermother.

Her mother was insured by the Respondent and carried the SEF 44 - Family Protection Endorsement, which is an endorsementattached to the Alberta Standard Automobile Policy (SPF 1). [4] The Appellant filed an action seeking coverage under the SEF 44 insurance issued to her mother. The Respondent arguesthat this case involves a straightforward

interpretation of the SPF 1 and the SEF 44 endorsement, which establishes that there is nocoverage if the Plaintiff is injured while an occupant of a stolen vehicle (Brief of the Respondent at para 7). Conversely, the Appellantargues that there are triable issues that should not have been summarily dismissed (Brief of the Appellant at para 61). Masters’ Decisions [5] The Respondent brought two applications in Masters’ Chambers seeking

summary dismissal of the Appellant’s claim. [6] The first application heard on April 7, 2015 was partially based on hearsay evidence. The Master did not make anydetermination of the application on its merits, but adjourned it sine die so that proper evidence could be obtained. [7] The second application was heard on August 15, 2016. The Master granted the Respondent’s second application anddismissed the Appellant’s claim. The Master followed McCauley (Litigation Guardian of) v Blagdon (2006), (ONSC), 84 OR (3d) 792, 156 ACWS (3d) 579 (Sup Ct J), concluding in his very brief oral reasons “Ms.

Ashley was the occupant of a stolenvehicle, and that seems to me to be to exactly what SPF 1 is about ...” The Appellant appeals that decision. Overview of Insurance Agreement Provisions [8] The following are the relevant portions of the SPF 1 and the SEF 44. [9] Sections 2 and 3 of the SPF 1 under “General Provisions,

Definitions and Exclusions” provide: OCCUPANT DEFINED In this Policy the word “occupant” means a person driving, being carried in or upon or entering or getting on to or alighting from anautomobile. CONSENT OF OWNER No person shall be entitled to indemnity or payment under this Policy who is an occupant of any automobile which is being used withoutthe consent of the owner thereof [emphasis added]. [10]

Section 2 of the SEF 44 provides: INSURING AGREEMENT … that the Insurer shall indemnify each eligible claimant for the amount that such eligible claimant is legally entitled to recover from aninadequately insured motorist as compensatory damages in respect of bodily injury or death sustained by an insured person by accidentarising out of the use or operation of an automobile [emphasis added]. [11] Finally, s. 11 of the SEF 44 under “miscellaneous provisions” provides: This endorsement is attached to and forms part of the policy and shall be effective from the local time and effective date of the policy orrenewal thereof, or if added to the policy during the policy period, from the local time and effective date of the endorsement specifyingthe addition of this coverage.

Except as otherwise provided in this endorsement, all limits, terms, conditions, provisions,

definitions and exclusions of the policy shallhave full force and effect. [12] In Poulin v Wawanesa Mutual Insurance Company, 2016 ABQB 547, 44 Alta LR (6th) 374, Sanderman J. stated: 8 The S.E.F. 44 is not part of the basic coverage. It is marketed by the insurer as extra protection for the purchaser and his familyagainst uninsured or underinsured drivers. The purchaser must have insurance.

If he chooses a policy with the S.E.F. 44, his expectationis that he will have the protection of the extra coverage purchased if he has the misfortune to be involved in an accident with anuninsured or inadequately insured motorist. Standard of Review [13] The standard of review on appeal from the Master is correctness: Bahcheli v Yorkton Securities Inc, 2012 ABCA 166 at para

30, 524 AR 382.

Summary Judgment Test [14] Rules 7.2 to 7.4 of the Alberta Rules of Court, Alta Reg 124/2010 govern

summary judgment applications. Rule 7.3 providesin part: 7.3(1) A party may apply to the Court for

summary judgment in respect of all or part of a claim on one or more of the following grounds: … (

b) there is no merit to a claim or part of it; …

(3) If the application is successful the Court may, with respect to all or part of a claim, and whether or not the claim is for a single andundivided debt, do one or more of the following: (

a) dismiss one or more claims in the action or give judgment for or in respect of all or part of the claim or for a lesser amount; … [15] The test for

summary judgment is whether there is “no genuine issue”. In Hryniak v Mauldin, 2014 SCC 7, [2014] 1 SCR 87,the Supreme Court explained: 49 There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on amotion for

summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2)allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a justresult. [16] In discussing Hryniak, the Court of Appeal of Alberta in Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108 at para13, 572 AR 317, stated that the modern test for

summary judgment required the court to examine the record to see if a disposition that isfair and just to both parties can be made on the existing record. [17] More recently, the Court of Appeal in Condominium Corp No 0321365 v Cuthbert, 2016 ABCA 46 at para 27, 612 AR 284,explained two considerations for

summary judgment applications: 1. with respect to the process, the court must ask whether examination of the existing record can lead to an adjudication anddisposition that is fair and just to both parties; and 2. with respect to the substantive issues, the court must ask whether there is any issue of merit that genuinely requires a trial or,conversely, whether the claim or defense is so compelling that the likelihood it will succeed is very high such that it should bedetermined summarily. [18] The Court provides further guidance (Cuthbert at paras 28-29):

Summary judgment is not possible if opposing parties' affidavits and evidence conflict on material facts because a chambers judgecannot weigh evidence or credibility on a

summary judgment application [citations omitted]. Complex legal questions may be sufficient to deny

summary judgment. A full trial is required when the

summary record cannot be usedto decide legal issues that are unsettled, complex or intertwined with facts: Templanza v. Wolfman, 2016 ABCA 1 (Alta. C.A.) at para20; Amack at paras 36-37. A trial is also required when an applications judge is not satisfied she can fairly resolve the dispute on therecord before her: Templanza at para 20 [emphasis added]. Issue [19] The issue on this appeal is whether there is a genuine issue for trial.

Parties’ Positions [20] It is undisputed that the Appellant would qualify as an eligible claimant under the SEF 44. [21] The Respondent takes the position that the SEF 44 endorsement is not a policy of automobile insurance but rather is anendorsement attached to a policy of automobile insurance. Therefore, the SPF 1 must be read jointly with the SEF 44, and the Appellantshould be denied coverage as she was in a vehicle being driven without the owner’s consent.

The Respondent primarily relies on thewording of the SEF 44 and SPF 1, and the McCauley decision. [22] The Respondent further submits that the Appellant’s knowledge as to whether the vehicle was stolen is irrelevant, citing McCauley, Simison (Litigation Guardian of) v Catlyn (2004), (ON CA), 73 OR (3d) 266, 242 DLR (4th) 577 (CA), and Riddell v Slattery Estate (1988), (ON CA), 64 OR (2d) 737, 50 DLR (4th) 533 (CA). In those decisions, the

exclusion applied even when the injured claimant did not have knowledge that the car was being operated without the owner’s consent. [23] The Appellant argues that the SEF 44 is a stand-alone agreement of insurance and that the exclusionary clause of the SPF 1does not apply to the SEF 44, but only to sections A, B and C of SPF 1. The Appellant reasons that the SEF 44 is an add-onendorsement for which an extra premium is paid, and is separate and additional coverage extending to individuals rather than the vehiclein which they are traveling.

She cites Jager v Liberty Mutual Fire Insurance Co, 2001 ABCA 163 at para 17, 93 Alta LR (3d) 391. [24] The Appellant further submits that it remains a triable issue as to whether or not excluding coverage for a claimant, who wasan innocent passenger in a vehicle driven without consent, would be so unfair as to violate the intentions of the Alberta Legislature indrafting the Insurance Act, RSA 2000, c I-3. She argues that ambiguous exclusion clauses should be interpreted in favor of the insured,citing Somersall v Friedman, 2002 SCC 59 at para 47, [2002] 3 SCR 109. Analysis [25]

Section 11 of SEF 44 provides that the SEF 44 is an endorsement attached to the policy and that all exclusions of the policy“shall have full force and effect” on the endorsement. [26] Neither the Appellant nor the Respondent put forward any binding decision (or any Alberta decision) on the applicability ofan exclusion clause under SPF 1 to the SEF 44 endorsements not contained within the main policy of insurance.

The Respondent citesOntario cases that interpret that province’s equivalent SPF 1 and SEF 44 sections in the context of a passenger injured while in a vehicledriven without consent of the owner (McCauley, Simison, Riddell). [27] In McCauley, the plaintiff was injured while she was a passenger in a motor vehicle driven without the consent of the owner.She was a minor at the time of the accident and pursued a claim against her mother’s insurance company pursuant to the OPCF 44R –Family Protection Coverage endorsement.

The insurance company sought to strike the statement of claim, arguing that there was noreasonable cause of action since the plaintiff was excluded from coverage under OPCF 44R given the wording of the

section 1.8.2 of theOAP 1. The Court relied on Simison and determined that there was no coverage under both the uninsured and the underinsuredprovisions of OPCF 44 (McCauley at para 10). [28] At the relevant time in McCauley, Simison and Riddell,

section 1.8.2 of the OAP 1 (the Ontario standard auto policy) did notspecify whether coverage was denied if a passenger did not have knowledge of the driver’s consent. The

section at the time provided: Except for certain Accident Benefits coverage, there is no coverage under this policy for an occupant of an automobile used or operatedby a person in possession of the automobile without the owner's consent. [29] The previous Ontario

section is almost identical to

section 3 of Alberta’s SPF 1 under the “General Provisions,

Definitionsand Exclusions,” which denies coverage to an “occupant of any automobile which is being used without the consent of the ownerthereof”. The issue of knowledge of the passenger has not been addressed in Alberta. The Ontario jurisprudence, although interpreting asimilarly worded auto policy, is not binding on this court. [30] However, it bears mentioning that

section 1.8.2 of OAP 1 has since been revised to include a knowledge component: … there is no coverage under this policy for a person who, at the time he or she willingly becomes an occupant of an automobile, knowsor ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without theowner’s consent [emphasis added]. [31] The Respondent relies on Ontario case law, which holds that the exclusion applies even if the passenger has no knowledge thevehicle is stolen (or being operated without consent) (McCauley at paras 12-14, 16; Riddell). The Respondent further argues that thewording of

section 3 of SPF 1 is straightforward, relying in part on the discussion in Marsden v Dominion of Canada GeneralInsurance Co, [1987] OJ No 2401 at paras 6-12, 4 ACWS (3d) 331 (Dist Ct). [32] There may be circumstances in which it is appropriate to think of the statutes of different jurisdictions as working together toform a coherent regulatory regime: R Sullivan, Sullivan on the Construction of Statutes, 5th ed (Markham, ON: LexisNexis, 2008) at419. In this case, the clarification resulting from the change in

section 1.8.2 of the OAP 1 raises the question as to whether the previouswording was properly interpreted by the Ontario courts. Insurance policies must be broadly interpreted in favour of the insured; anyambiguity in the policy is to be construed against the insurer: Consolidated Bathurst Export Ltd v Mutual Boiler and MachineryInsurance Co, (SCC), [1980] 1 SCR 888, Reid Crowther & Partners Ltd v Simcoe & Erie General Insurance Co, (SCC), [1993] 1 SCR 252 at 268-69. [33] There are two or more reasonable

interpretations of

section 3 of SPF 1, for example: 1) coverage is denied whether or not thepassenger knew the driver had the owner’s consent; or, 2) coverage is denied only when the passenger knew or reasonably ought to haveknown the driver did not have consent.

The Appellant submits that it would be “unfair” to be penalized in light of the ambiguity in thepolicy. [34] As no binding jurisprudence was provided on the issue of the relevance of the Appellant’s knowledge in these circumstances,I find that the relevance and effect of knowledge of consent in these circumstances is unsettled in Alberta. [35] If knowledge is relevant to the applicability of the SPF 1 exclusion clause, the Court would require evidence as to whether theAppellant had knowledge of the driver’s consent.

Both parties agree that there is no evidence before the Court as to whether theAppellant had any knowledge of Bradley Paul’s consent to drive the vehicle. The Appellant references paragraph 8 of her Reply toNotice to Admit Facts which states she “has no knowledge if the Defendant Bradley Paul had the consent of Edward Bachouti to drivethe Dodge Caravan.”

[ 36 ] In Egerton v Wood, 2011 ONSC 1711 , 200 ACWS (3d) 81, the Ontario court dealt with the revised wording of

section 1.8.2 of OAP 1 in the circumstances where the plaintiff was injured while a passenger in a vehicle. The insurance company sought

summary judgment. The Court stated: 20 I find that consent in this case is a live issue. There are material facts in dispute. It is unknown at this time whether the Ferlatte vehicle was stolen, or was operated by Mr. Wood without Mr. Ferlatte's consent or was operated by Mr. Wood with Mr. Ferlatte's consent which at some point in time may have run out leaving Mr. Wood in an "over-holding" position regarding consent. Further, what Mr. Egerton knew or ought reasonably to have known at the time that he willingly became an occupant of the motor vehicle being operated by Wood cannot be determined on a

summary judgment motion. Such facts can only be determin ed at trial and would necessarily inform an

interpretation of

section 1.8.2 of OAP 1. 21 I find that material facts in respect of consent are in dispute and can only be determined at trial on a full evidentiary record [emphasis added]. [ 37 ] For the foregoing reasons, I find that the Respondent has not met its burden of establishing that there is no genuine issue for trial. Conclusion [ 38 ] The appeal is allowed. Costs [ 39 ] If the parties are unable to agree on costs, they may address this issue within 60 days of the date of this decision. Heard on the 7 th day of July, 2017. Dated at Edmonton, Alberta this 3rd day of August, 2017. Donald Lee J.C.Q.B.A.

Appearances: Senia Tarrabain, Tarrabain Law for the Plantiff/Appellant Michelle E. Grose, Dean Duckett Carlson LLP for the Defendant/Respondent