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September 2019

Three Case Summaries:

Recent developments & decisions relevant to insurance law

Van Krkachovski
Van Krkachovski

By Van Krkachovski

1. Who is an insured person?

Hunt v. Peel Mutual Insurance Company, 2019 ONCA 656

The Court of Appeal determined that to be covered under s. 239 of the Insurance Act, an occupant's liability for loss or damage must arise from the use or operation of the vehicle. Mr. Hunt and his daughter, Amealia, were passengers in a vehicle driven by Mr. Hunt's girlfriend, Tammy-Lynn Dingman, who was driving impaired. Ms. Dingman held an automobile insurance policy at the time with Peel Mutual Insurance Company.

Amelia's injuries arose from the impaired driver's use of the vehicle. However, Mr. Hunt's liability arises from negligent parenting, not from his actions as an occupant of the vehicle.

The Court of Appeal agreed with the motion judge that Peel Mutual Insurance Company is not required to defend Mr. Hunt against his daughter's lawsuit, as he is not an “insured person” under s. 239 of the Insurance Act.

The plain and ordinary meaning of s. 239 cannot be overcome by the fact that the Insurance Act is consumer protection legislation, or that policies should be construed in favour of coverage. Due to his decision to put his daughter in a vehicle operated by an impaired driver, if Mr. Hunt was covered by the insurance policy, it would lead to the absurd outcome that coverage hinges on whether Mr. Hunt was an occupant. As such, the appeal is dismissed.

2. If you take the wheel, you take control

McKay v. Park, 2019 ONCA 659

A front-seated passenger who unexpectedly grabbed the wheel of a vehicle, causing an accident, is considered to have operated the vehicle without the driver's consent. It was not foreseeable the passenger would grab the wheel, despite the fact that the driver and passenger were arguing and emotional.

The owner of the vehicle in such a situation is not vicariously liable under s. 192(2) of the Highway Traffic Act. Summary judgment in favour of a dismissal against the owner was upheld.

Lessons: The rule 20 appeal against summary judgment

  1. It is not necessary for a judge to rehearse in every case who bears the burden. It is appropriate for a judge to focus only on the areas of contention when explaining her conclusion that there is no genuine issue requiring trial.

    The primary definition of possession contemplates power, control or dominion over property.

  2. “The primary definition of possession contemplates power, control or dominion over property.”1 The motion judge found that by seizing the wheel, Mr. Hnatiuk “took control of the car” away from the driver. The motion judge's failure to use the word “possession” when expressing her ruling is not a palpable and overriding error.

  3. The motion judge was not obliged to refer to all the evidence that she considered in order to show her path to the decision.

3. Do priority provisions in s. 268 of the Ontario Insurance Act apply to an out-of-province insurer for an accident that took place in Ontario?

Coseco v. Liberty, 2019 ONSC 4918

Where an MVA occurs in Ontario, and there is an out-of-province insurer policy covering the claimant, and that insurer has signed the Power of Attorney and Undertaking (PAU), the insurer is bound by s. 268 of the Insurance Act in its entirety.

GMAC Insurance Company issued a New York motor vehicle insurance policy to the claimant who resides in the State of New York. GMAC is not licensed to sell insurance in Ontario. The claimant was involved in an accident in Toronto on July 4, 2015. The car in which he was a passenger was insured by an Ontario insurer, Coseco Insurance Company. Liberty Mutual Insurance Company insures the spouse of the claimant with a New York State automobile insurance policy.

The claimant applied to Coseco for statutory accident benefits under the Statutory Accident Benefits Schedule (SABS). Coseco paid statutory accident benefits and started an arbitration to determine the priority pursuant to s. 268 of the Insurance Act.

The arbitrator determined the priority provisions in s. 268 of the Insurance Act applied so GMAC appealed. Both Coseco and Liberty Mutual argue that the Arbitrator's decision should be upheld.

Since the MVA occurred in Ontario, a US insurer, Liberty Mutual, that an executed power of attorney and undertaking, must attorn to Ontario law and jurisdiction.  Otherwise, a GMAC-insured vehicle which struck an Ontario pedestrian (without insurance) would result in GMAC rejecting the application for accident benefits on the basis that the Ontario SABS were not applicable to it. This would lead to the Ontario pedestrian relying on the government system, which was not the policy behind the Accident Benefits legislation.

The Superior Court determined that the standard of review is reasonableness.2 The arbitration concerned a priority dispute, not an exceptional circumstance warranting a correctness standard. The fact that the case involved more than one jurisdiction and that the Arbitrator's decision results in the Ontario legislation having extra-jurisdictional effect does not make it a constitutional issue (where the standard of correctness is used). GMAC intends to appeal to the next level.

  1. Seegmiller v. Langer, 2008 CanLII 53138 (ON SC), 301 D.L.R. (4th) 454 (Ont. S.C.J.), at para. 34
  2. Intact Insurance Co v. Allstate Insurance Co. of Canada, 2016 ONCA 609, 131 O.R. (3d) 625, at para. 53


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