) ) STRAIGHT FORWARD AUTO SERVICE INC. v. 2448083 ONTARIO INC. O/A GTA, 2017 ONSC 5773

CITATION : Straight Forward Auto Service Inc. v. Mead, 2017 ONSC 5773 COURT FILE NO.: 740/16 DATE: 2017-09-28 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) STRAIGHT FORWARD AUTO SERVICE INC. and 2448083 ONTARIO INC. O/A GTA EXOTICS Plaintiffs – and – ADAM MEAD and ANDREW G. CAMPBELL Defendants ECONOMICAL MUTUAL INSURANCE COMPANY and THE PERSONAL INSURANCE COMPANY Third Parties ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Paul Alexander Robson, for the Plaintiffs Nicholas C.

Bader, for the Defendant, Adam Mead Steven Bellissimo, for the Defendant, Andrew Campbell Conor Wyche for the Third Party, The Personal Insurance Company No one for the Third Party, Economical Mutual Insurance Company ) ) ) HEARD: September 25, 2017 REASONS FOR JUDGMENT gray J. [ 1 ] There are three motions before the court: a motion by the plaintiffs for

summary judgment; a motion by the defendant Campbell to dismiss or stay the action because of the non-payment of costs specified in an interlocutory order; and a motion for

summary judgment by the third party, Personal Insurance, for an order dismissing the action as against the defendant Campbell. [ 2 ] For the reasons that follow, I order that the action as against the defendant Campbell be dismissed; I order that the motion for

summary judgment by the plaintiffs as against the defendant Mead be dismissed; and the motion based on the non-payment of costs is moot. Background [ 3 ] The plaintiffs are in the business of renting exotic automobiles. [ 4 ] On September 30, 2015, the defendant Mead leased an Aston Martin from the plaintiffs. On the front page of the lease agreement, the following is found: Renter is liable for all damage and costs to vehicle caused by a driver not named in this agreement even if renter has purchased LDW. [ 5 ] On the second page of the lease, the following appears: The VEHICLE may be used ONLY by an AUTHORIZED DRIVER. An AUTHORIZED DRIVER is:

a) YOU, the RENTER/LICENCED DRIVER(S), and/or

b) A licenced driver who has been accepted by the COMPANY as an additional RENTER as referred to page two on the other side of this agreement. [ 6 ] There is no dispute that Mr. Mead was the only authorized driver, and that there was no additional renter identified in the lease agreement. [ 7 ] On October 2, 2015, an accident occurred on the Gardiner Expressway. The Aston Martin was being driven by the defendant Campbell, and a collision occurred with a Toyota being driven by one Kaitlin Nay.

It is alleged by the plaintiffs that the Aston Martin was totally destroyed. [ 8 ] In his pleadings and in his affidavit material filed on these motions, the defendant Campbell claims that he had permission from the defendant Mead to drive the vehicle. Further, he claims that the accident was without fault on his part.

He claims that the steering of the vehicle malfunctioned, and that that was the cause of the accident. [ 9 ] The defendant Mead denies that he gave any permission to the defendant Campbell to drive the vehicle. [ 10 ] The owners of both the Aston Martin and the Toyota were insured under valid insurance policies by insurers licensed to do business in the Province of Ontario. The defendant Campbell was insured by the third party, Personal Insurance. [ 11 ] The plaintiffs’ claim against the defendant Mead is based on the lease agreement.

It is alleged that Mead is liable because the vehicle was driven by someone other than Mead, contrary to the terms of the agreement. While the plaintiffs have not formally amended the Statement of Claim to plead negligence on Mead’s part, in a subsequent affidavit filed on behalf of the plaintiffs, the following appears: The defendant Mead further denies having any knowledge that the defendant Campbell was in possession of the vehicle. However, it was his responsibility to ensure that access to the vehicle was limited to him and to take reasonable measures and to know of its whereabouts at all material times.

Failure to secure the vehicle or the keys to the vehicle constitute prohibited use of that vehicle as set out in the agreement. [ 12 ] Subsequent to the commencement of the action, Economical Insurance and Personal Insurance were added as third parties by the defendant Campbell. Personal Insurance has filed a Statement of Defence to the third party claim, and has also filed a Statement of Defence to the main action. The third party Economical Insurance has not filed any response, either to the action or to the various motions. Submissions [ 13 ] Mr.

Robson, counsel for the plaintiffs, submits that the plaintiffs should be granted judgment as against both of the defendants. While he acknowledges that the evidence regarding damages is incomplete, he submits that there is sufficient evidence of liability to permit partial

summary judgment on the issue of liability, and to leave the issue of damages to be quantified subsequently by the court if the parties cannot agree. [ 14 ] Mr. Robson submits that there is no dispute on the essential facts, nor is there any dispute as to the terms of the lease agreement on which the action is based. [ 15 ] Under the lease agreement, the defendant Mead acknowledged that the vehicle could only be used by an authorized driver, which in this case was only the defendant Mead. Mr.

Robson submits that Mead either authorized the defendant Campbell to drive the vehicle, or he did not take sufficient care to ensure that it would not be driven by an unauthorized person, namely by securing the keys, or in some other fashion. [ 16 ] Mr. Robson submits that by virtue of his breach of the agreement, Mr. Mead is liable to compensate the plaintiffs for loss of the vehicle and for lost income as a result of the loss of use of the vehicle. [ 17 ] Mr. Robson submits that the defendant Campbell is liable because he stole the vehicle and because of his negligence in operating the vehicle. [ 18 ] Mr.

Wyche, counsel for Personal Insurance, submits that the action as against the defendant Campbell should be dismissed. [ 19 ] Mr. Wyche particularly relies on s.263 of the Insurance Act. Pursuant to s.263(1), the

section applies where there is property damage to an automobile arising directly or indirectly from the use or operation in Ontario of one or more automobiles. It applies where, as in this case, both automobiles that were involved in an accident were insured under motor vehicle liability policies issued by insurers that were licensed to undertake automobile insurance in Ontario. [ 20 ] Mr. Wyche submits that, where the requisites of s.263(1) of the Act are met, as they are here, s.263(5) of the Act applies. It provides: 263

(5) If this

section applies, (

a) an insured has no right of action against any person involved in the incident other than the insured’s insurer for damages to the insured’s automobile or its contents or for loss of use; (a.1) an insured has no right of action against a person under an agreement, other than a contract of automobile insurance, in respect of damages to the insured’s automobile or its contents or loss of use, except to the extent that the person is at fault or negligent in respect of

those damages or that loss; (

b) an insurer, except as permitted by the regulations, has no right of indemnification from or subrogation against any person forpayments made to its insured under this section. [21] Mr. Wyche submits that according to the plain words of s.263(5)(a), the plaintiffs have no cause of action as against Mr.Campbell. He points out that the action is for damage to the automobile or for loss of use of the automobile. In such a circumstance, theplaintiffs have no right of action against any person other than the plaintiffs’ insurer. Thus, they have no right of action as against Mr.Campbell. [22] The only exception to the strict requirements of s.263(5)(

a) is contained in s.263(5)(a.1). Under that clause, an action canbe maintained under an agreement, but only to the extent that the person is at fault or negligent in respect of the damages or the loss. Mr.Wyche submits that that clause has no application to Mr. Campbell, who had no agreement with the plaintiffs. [23] Mr. Wyche submits that the clause may have application to Mr. Mead, since he had an agreement with the plaintiffs. However, for the plaintiffs to rely on that agreement, it would have to be shown that Mr. Mead was at fault or negligent in respect of thedamages claimed or the loss of use of the vehicle. [24] Mr. Bader, counsel for the defendant Mead, submits that the motion for

summary judgment as against Mr. Mead shouldbe dismissed. [25] Mr. Bader submits that Mr. Mead has pleaded that the provisions of the lease agreement on which the plaintiffs rely areunconscionable, and thus unenforceable. He submits that it would be inappropriate to attempt to resolve that issue, being one of mixedfact and law, on a motion for

summary judgment. [26] Mr. Bader also submits that, pursuant to s.263(5)(a.1) of the Insurance Act, the plaintiffs can only rely on the leaseagreement to the extent that it is alleged that Mr. Mead was at fault or negligent in respect of the damages claimed or the loss of use ofthe vehicle. [27] Mr. Bader points out that the plaintiffs have not claimed negligence in the Statement of Claim; rather, they rely only onthe alleged breach of the agreement by Mr. Mead. Thus, he submits that the plaintiffs cannot rely on s.263(5)(a.1) in the circumstances. [28] Mr. Bader submits, in any event, that Mr.

Mead was not at fault or negligent. He was not the driver of the vehicle whenthe accident occurred, and he denies giving permission to Mr. Campbell to drive the car. He submits that Mr. Mead could not haveforeseen that Mr. Campbell would or could have stolen the keys to the car and drive it without Mr. Mead’s permission. [29] Mr. Bader submits that Mr. Mead has pleaded that the cause of the accident was because of some mechanical malfunctionin the car, for which he could not be responsible. [30] Mr.

Bader submits that there is conflicting evidence on the factual issues that arise, and it is not appropriate to attempt todeal with them on a motion for

summary judgment. [31] Mr. Bellissimo, counsel for Mr. Campbell, adopts the submissions of Mr. Wyche that the action as against Mr. Campbellshould be dismissed based on s.263 of the Insurance Act. [32] Mr. Bellissimo also submits that the action should be dismissed, or at least stayed, as a result of the plaintiffs’ failure orrefusal to pay costs of $6,000 to Mr. Campbell that were ordered by Miller J.

While the plaintiffs have served and filed a purportedmotion for leave to appeal that order, they have appealed to the wrong court and they have taken no steps to perfect the motion for leave,notwithstanding many warnings to do so. He submits that at this point it can only be concluded that the plaintiffs do not intend to pursuethe appeal or pay the costs, and it would now be appropriate to dismiss or stay the action. [33] Authorities relied on by the parties include: 583809 Ontario Ltd. v. Kay (1995), (ON SC), 24 O.R.(3d) 445 (Gen. Div.); 10149 v. Registrar of Motor Vehicles, (ON LAT); Singh v.

Tattrie, 2013 ONSC 5154; Hryniakv. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87; Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200; Clarendon NationalInsurance v. Candow (2007), 2007 ONCA 680 , 87 O.R. (3d) 728 (C.A.); Keyhani v. Downsview Chrysler Toronto, [2016] O.J.No. 20 (Small Claims Court); Moore v. Lee, [2015] O.J. No. 1616 (Small Claims Court); 1615540 Ontario Inc. (c.o.b. Healing HandsMassage Therapy Clinic) v. Simon, 2016 ONCA 966; Trotter v. Trotter (2014), 2014 ONCA 841 , 122 O.R. (3d) 625 (C.A.);Aronowicz v. Emtwo Properties Inc. (2010), 2010 ONCA 96 , 98 O.R. (3d) 641 (C.A.); Collins v.

Cortez, 2014 ONCA 685;Rogers Cable TV Ltd. v. 373041 Ontario Ltd. (1994), (ON SC), 22 O.R. (3d) 25 (Gen. Div.); King Lofts Toronto 1Ltd. v. Emmons, 2014 ONSC 215; A.C. v. Joyce, 2017 ONCA 49; Enterprise Rent-A-Car v. Fountaine, [2006] O.J. No. 5202 (SmallClaims Court); Gurpersaud v. Safie, 2016 ONSC 7033; Tilden Rent-A-Car Co. v. Clendenning (1978), (ON CA), 18O.R. (2d) 601 (C.A.); and Richardson-Watson v. 443496 Ontario Inc. (c.o.b. Discount Car and Truck Rentals Ltd.), [2005] O.J. No. 962(S.C.J.). Analysis [34] I will first deal with Mr. Wyche’s argument based on s.263 of the Insurance Act.

The relevant parts of it have beenreproduced earlier, and I will not reproduce them again. [35] It is clear, in my view, that the legislature intended, in enacting s.263 of the Insurance Act, to create a no-fault regime, tothe extent possible, in cases where the only claim is for property damage to an automobile arising from an accident in the use oroperation of an automobile.

[ 36 ] In Clarendon National Insurance , supra, Juriansz J.A. stated, at para. 7:

Section 263 of the Insurance Act replaced the tort system that resolved automobile damage claims prior to its enactment. In the new statutory scheme, insureds can no longer sue the tortfeasor driver whose negligence has caused damage to their cars. Rather, their own liability insurer pays for the damage, to the extent that they were not at fault, under the third party liability

section of their motor vehicle liability policies. Insureds can recover the at-fault portion of their damage by purchasing collision insurance coverage. Insurers have no right of subrogation for payments to their own insureds, but, on the other hand, do not have to pay the subrogated claims previously brought by other insurers in the tort system.

The result is that the statutory scheme eliminates the transactions costs that were inherent in the tort system. [ 37 ] At para. 10, he stated: Key to the regime is the insured’s inability to recover property damage from anyone other than his or her own insurer, except in the very limited circumstances described in s.263(5)(a.1). [ 38 ] I agree with Mr. Wyche that s.263(5)(a.1) does not apply to the action as against Mr. Campbell. Mr. Campbell had no agreement with the plaintiffs. Accordingly, there can be no escape from the plain words of s.263(5)(a). The plaintiffs simply have no right of action as against Mr.

Campbell. The owners of the two vehicles involved in the accident were both insured by policies of insurance issued by insurers licensed to issue insurance policies in Ontario. [ 39 ] For these reasons the action as against Mr. Campbell is dismissed. [ 40 ] Mr. Mead had an agreement with the plaintiffs. Accordingly, s.263(5)(a.1) may apply. However, it only applies to the extent that Mr. Mead was “at fault or negligent” in respect of the damages claimed or for the loss of use of the vehicle. I will discuss this issue when I deal with the plaintiffs’

summary judgment motion. [ 41 ] The action as against Mr. Campbell having been dismissed, his motion to stay or dismiss the action on account of the non- payment of costs is now moot. I simply note that the order of Miller J. is enforceable through the normal enforcement mechanisms under the Rules. [ 42 ] That leaves the action as against the defendant Mr. Mead. As noted, the action is reduced to the question of the applicability of s.263(5)(a.1) of the Insurance Act . Under that clause, the plaintiffs can rely on the agreement with Mr. Mead in respect of the damages claimed, but only to the extent that Mr.

Mead was at fault or negligent in respect of the damages or the loss of use. [ 43 ] Mr. Robson submits that Mr. Mead can be found liable on two bases. First, the words “at fault” are words of broad import, and they can include a breach of contract. To the extent that Mr. Mead was in breach of his agreement to allow the vehicle to be used only by himself, and no one else, he can be said to have been at fault. Second, the plaintiffs have claimed, at least in their affidavit material, that Mr.

Mead was negligent, in that he was responsible to ensure that access to the vehicle was limited to himself, and he was required to take reasonable measures to do so, and to know of the vehicle’s whereabouts at all material times. He failed to take reasonable measures to secure the vehicle or the keys to the vehicle. [ 44 ] In my view, there are simply too many disputed issues to permit

summary judgment, or even partial

summary judgment, to be issued. To the extent that there are issues requiring the

interpretation of s.263(5)(a.1) of the Insurance Act , they are best determined with the benefit of a full evidentiary record and full argument, based on that evidentiary record. This is not a case in my view, that can be resolved through the use of a mini-trial. A mini-trial would not be materially shorter or more efficient than a regular trial. [ 45 ] The question of whether Mr. Mead can be said to have been at fault or negligent cannot be resolved on the skeletal evidentiary record that is now before me. There is a dispute as to whether the vehicle was mechanically sound. There is a dispute as to whether Mr.

Mead permitted Mr. Campbell to drive the vehicle. If he did not permit Mr. Campbell to drive the vehicle, it is less than clear that he took, or did not take, reasonable steps to ensure that Mr. Campbell did not drive the vehicle. Furthermore, there is a dispute as to whether the contractual provisions on which the plaintiffs rely are unenforceable, based on the analysis of the Court of Appeal in Tilden . This is fundamentally a question of mixed fact and law. [ 46 ] I do not consider it fatal that Mr. Robson has not yet amended the Statement of Claim to specifically plead negligence.

It has clearly been raised in the affidavit material, and Mr. Mead cannot claim to be surprised. I have little doubt that if and when Mr. Robson seeks to amend the Statement of Claim, an amendment will be readily granted if it is not consented to. [ 47 ] For the foregoing reasons, the plaintiffs’ motion for

summary judgment as against the defendant Mead is dismissed. [ 48 ] I will entertain brief written submissions with respect to costs, not to exceed three pages together with a costs outline. Mr. Bellissimo, Mr. Bader and Mr. Wyche shall have five days, and Mr. Robson shall have five days to respond. Mr. Bellissimo, Mr. Bader and Mr. Wyche shall have three days to reply. Gray J. Released: September 28, 2017 CITATION : Straight Forward Auto Service Inc. v. Mead, 2017 ONSC 5773

COURT FILE NO.: 740/16 DATE: 2017-09-28 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: STRAIGHT FORWARD AUTO SERVICE INC. and 2448083 ONTARIO INC. O/A GTA EXOTICS Plaintiffs – and – ADAM MEAD and ANDREW G. CAMPBELL Defendants ECONOMICAL MUTUAL INSURANCE COMPANY and THE PERSONAL INSURANCE COMPANY Third Parties REASONS FOR JUDGMENT GRAY J. Released: September 28, 2017