



COURT OF APPEAL FOR ONTARIO

CITATION: Ruddell v. Gore Mutual Insurance Company, 2019 ONCA
    328

DATE: 20190425

DOCKET: C65622

van Rensburg, Hourigan and Huscroft JJ.A.

BETWEEN

Michael Ruddell and Caroline Metcalfe

Plaintiffs

and

Gore
    Mutual Insurance Company
and

Allstate Insurance Company of Canada

Defendants

(
Appellant
/
Respondent
)

C. Kirk Boggs and Jennifer L. Hunter, for the appellant

David F. Murray and Saro A. Setrakian, for the respondent

Heard: March 29, 2019

On appeal from the judgment of Justice Shaun S. Nakatsuru
    of the Superior Court of Justice, dated June 22, 2018, with reasons reported at
    2018 ONSC 3932.

Hourigan J.A.:

[1]

The plaintiffs, Michael Ruddell and Caroline Metcalfe, brought an action
    pursuant to s. 258(1) of the
Insurance Act
, R.S.O 1990, c. I.8, for
    the payment of insurance monies. The payment was sought to satisfy a judgment
    that arose from a settlement in an action for damages suffered by them as a
    result of a single vehicle accident. The issue below was which insurer, Gore
    Mutual Insurance Company (Gore) or Allstate Insurance Company of Canada
    (Allstate), should satisfy the judgment. Gore was the insurer of the owner of
    the vehicle and Allstate was the insurer of Mr. Ruddell. All parties agreed
    that this issue could be determined on a summary judgment motion.

[2]

The motion judge concluded that Gore was liable for the judgment. In so
    holding, he found that the owner of the vehicle had not breached Gores
    insurance policy so as to forfeit the proceeds. In the alternative, he held
    that even if the policy was breached, the owner of the vehicle was entitled to
    relief from forfeiture.

[3]

These reasons explain why I would dismiss the appeal. In summary, I
    conclude that the motion judge did not err in his analysis of whether the
    policy was breached by reason of lack of cooperation. Given this finding, it is
    unnecessary to consider the issue of relief from forfeiture. However, to be
    clear, these reasons should not be interpreted as endorsing the motion judges brief
    treatment of that issue.

Facts

[4]

The accident took place on June 23, 2008 and involved a vehicle driven
    by Alan Stewart. Mr. Ruddell, the passenger, sustained injuries in the accident.
    Gayle Bass, the mother of Mr. Stewart, was the owner of the car.

[5]

Ms. Bass provided a statement to a claims adjuster on July 3, 2008,
    wherein she offered no information regarding the details of the accident. In
    that statement, she advised that she had sold her home in Wasaga Beach and
    stated that her son, who worked at different sites as a rigger in the
    entertainment industry, sometimes stayed at his girlfriends house in Niagara
    Falls and other times with a friend. She did not provide addresses for either
    residence in her statement, but followed up later to provide contact
    information for her son. Ms. Bass also mentioned that she was temporarily
    staying with her daughter-in-law in Verdun, Quebec at that time, and she
    provided the address.

[6]

As a consequence of the accident, Mr. Stewart pleaded guilty to
    dangerous driving causing bodily harm. At this sentencing hearing he stated, I
    was going down a road I didnt know. I thought the speed limit was something it
    wasnt, and by the time I realized that the road ended I thought I could make
    the turn and tried. The car slid on gravel, I went sideways, flipped.

[7]

The plaintiffs statement of claim in the main action was issued on June
    21, 2010 and served on Ms. Bass in August 2010 at an address in
    Saint-Marguerite-du-Lac-Masson, Quebec. On September 20, 2010, Gore sent a
    letter to Ms. Bass at the same address. Allstate does not dispute that the
    letter reached her at that address. The purpose of the letter was to put Ms.
    Bass on notice that the amounts claimed in the statement of claim exceeded her
    policy limit. She was also advised of her responsibility to cooperate in the
    defence of the action. In addition, she was told, We ask you to keep us
    advised of any change of address.

[8]

Counsel appointed by Gore served a statement of defence on behalf of Mr.
    Stewart and Ms. Bass on January 17, 2011 and on the same date wrote to Ms. Bass
    at her old Wasaga Beach address. Ms. Bass had informed Gore more than two years
    earlier that she had sold her home at that address.

[9]

On April 27, 2011, a third party claim was issued against the St.
    Lawrence Seaway Authority, alleging that it had jurisdiction over the road on
    which the accident had occurred and that negligent design had caused or
    contributed to the accident.

[10]

Efforts
    were made by defence counsel in September 2011 to reach Ms. Bass at various
    phone numbers without success. They also sent a letter to an address in Verdun,
    which was returned marked Moved, address unknown. A driving record search
    listed her Wasaga Beach address and indicated that Ms. Bass license had
    expired.

[11]

In
    April 2012, defence counsel retained a skip tracer to locate Ms. Bass. In its
    May 21, 2012 report, the skip tracer advised that it had been unable to locate
    Ms. Bass.

[12]

On
    June 19, 2012, a third party claim was issued on behalf of Mr. Stewart and Ms.
    Bass against the City of Thorold alleging that it was responsible for the road.
    Also named as a defendant in that action was Mick & Angelos Eatery and
    Bar, which was alleged to have over-served Mr. Stewart immediately before the
    accident.

[13]

Examinations
    for discovery were scheduled to take place in June 2013. During April and May,
    counsel for the defendants wrote repeatedly to Mr. Stewart at various addresses
    advising him of the upcoming discoveries. Counsel received no reply to that
    correspondence. On May 23, 2013, Gore instructed counsel to remove themselves
    as lawyers of record for the defendants in the action and third party claims.
    Counsel brought the necessary motions, serving Mr. Stewart and Ms. Bass add
    their last known addresses by substituted service. Mr. Stewart and Ms. Bass
    were eventually noted in default in the main action and Gore was added as a
    statutory third party. Apparently, Mick & Angelos was also noted in
    default, but the third party claims against the Seaway Authority and the City
    of Thorold were dismissed.

[14]

At
    an examination for discovery in 2016, an Allstate representative stated that an
    investigator hired by Allstate had located Ms. Bass at an address in
    Orangeville, Ontario as of October 2014.

[15]

Before
    the motion judge, Gore argued that Ms. Bass breached the policy by failing to
    cooperate with Gore in defending the action brought by the plaintiffs.
    Specifically, Ms. Bass is alleged to have breached the policy by failing to
    assist in attempting to obtain her sons co-operation, in contravention of s. 5(3)
    of
Statutory Conditions - Automobile Insurance
, O. Reg. 777/93, a
    regulation made under the
Insurance Act
.

[16]

The
    motion judge found that Gore failed to establish Ms. Basss breach of the
    policy. In the alternative, he found that, even if she had breached the policy,
    Ms. Bass was entitled to relief from forfeiture. He therefore granted summary
    judgment and held that the plaintiffs were entitled to recover their judgment
    from Gore.

Issues

[17]

The
    appeal raises the following issues:


(i)

Whether the motion judge erred in finding that Ms. Bass did not breach
    the policy; and


(ii)

Whether relief from forfeiture was available as a remedy and
    appropriately granted in this case.

Analysis

(i)

Failure to Cooperate

[18]

Gore
    relies on the above-mentioned statutory condition 5(3), which provides as
    follows:

The insured shall, whenever requested by the insurer, aid in
    securing information and evidence and the attendance of any witness and shall
    co-operate with the insurer, except in a pecuniary way, in the defence of any
    action or proceeding or in the prosecution of any appeal.

[19]

Gore
    submits that the motion judge erred in his analysis of the duty to cooperate
    imposed by this statutory condition. It argues that the duty would be rendered
    meaningless if an insured may disappear without a trace and subsequently argue
    that he or she is not in breach of contract because the insurer did not try
    hard enough to locate him or her. Further, Gore submits that Ms. Bass failure
    to cooperate prejudiced it because it resulted in Gore having insufficient
    evidence to maintain the third party claims.

[20]

The
    language of statutory condition 5(3) is broad and imposes on an insured a
    general duty to cooperate in the defence of an action. It does not specifically
    require the insured to update its insurer regarding any change in address. The
    issue for the motion judge was whether Ms. Bass failure to keep Gore apprised
    of her current address constituted non-cooperation that breached the policy.

[21]

The
    parties have conflicting positions on the correct analytical approach for
    determining whether Ms. Bass breached the policy. Gore submits that if Ms. Bass
    failed to cooperate in any respect then she breached the policy and her only
    recourse is to seek relief from forfeiture. In contrast, Allstates position is
    that there has to be a finding of
substantial
non-cooperation before
    Ms. Bass will be found to have breached the policy and will therefore be
    required to seek relief from forfeiture. This issue is particularly important
    in this case because Ms. Bass cannot be located and the onus to establish the
    breach is on the insurer, whereas the onus in an application for relief from
    forfeiture lies with the insured.

[22]

In
Canadian Newspapers Co. v. Kansa General Insurance Co.
(1996),

30 O.R. (3d)
    257 (C.A.), at p. 279, Weiler J.A. considered the nature of the duty to
    cooperate:

I have stated my view that the insured breached the duty of
    co-operation under the policy of insurance. In
Travellers Indemnity Co. of
    Canada v. Sumner
, supra, at p. 565. West J.A. stated:

The duty of the insured to co-operate with the insurer,
    being a condition precedent to his right to recover, requires him to assist
    willingly and to the best of his judgment and ability. If in this connection a
    breach occurs in some material respect the insurer is entitled even to refuse
    to defend an action. Lack of co-operation, however, must be substantial. No
    inconsequential or trifling breach of such obligation should serve to exonerate
    the insurer from his contractual liabilities under the policy.

The breach of the duty of co-operation in this case was
    substantial because it affected the insurer's assessment of the risks of the
    litigation.

[23]

Clearly
    this court has accepted the analysis of the New Brunswick Supreme Court, Appeal
    Division, in
Travellers Indemnity Co. v. Sumner Co. Ltd. and Fraser

(1960), 27 D.L.R. (2d) 562 (N.B.S.C. (A.D.)), that a breach of the duty to
    cooperate must be substantial. This approach is consistent with the argument
    advanced by Allstate. The issue then becomes whether there was substantial
    non-cooperation by Ms. Bass.

[24]

A
    breach of the duty to cooperate is different than, for example, a breach of
    statutory condition 6 (1)(c), which requires an insured to provide its insurer
    with a statutory declaration within 90 days of the date of the loss.
    Determining whether the latter condition has been complied with is relatively
    straightforward: either the statutory declaration was delivered on time or it
    was not. A consideration of an allegation of non-cooperation, by contrast,
    requires a qualitative analysis of the insureds conduct to determine whether
    it amounts to substantial non-cooperation. The court will necessarily conduct a
    review of all of the circumstances of the case, with particular emphasis on the
    interaction between the insured and the insurer. Whether an insured has engaged
    in substantial non-cooperation is, a pragmatic question to be determined in
    each case in the light of the particular facts and circumstances:
Reid v.
    Gore Mutual Insurance
, [1980] O. J. No. 750 (H. Ct. J.), at para. 46.

[25]

In
    concluding that Ms. Bass did not breach her obligation to cooperate, the motion
    judge found:

When first contacted by Gore or their representatives, she
    cooperated fully, providing a statement, and giving particulars about herself
    and her son. She continued providing information about the whereabouts of her
    son to Mr. Powell. It is important to recognize that Ms. Bass herself had
    little information to give that could assist in their defence of the action beyond
    assisting Gore in finding Mr. Stewart. When asked to do so, she did provide
    that information. There is nothing in the evidence to suggest that Ms. Bass was
    acting in concert with her son, encouraged him not to cooperate, or failed to
    assist Gore to locate Mr. Stewart. Mr. Stewarts actions do not touch or
    reflect upon Ms. Basss cooperation. In the last contact with Ms. Bass in
    September of 2010, she was not asked about any information regarding her sons
    whereabouts. Given the circumstances of what appears to be Mr. Stewarts
    employment and what appears to be a peripatetic lifestyle, it is not
    unreasonable that Ms. Bass could not assist Gore any more than she did.

[26]

In
    addition, the motion judge found that, although Ms. Bass did not provide her up
    to date address as requested in the September 20, 2010 letter, this one
    request in the context of the whole of the history and circumstances of Ms.
    Bass cooperation and the failure to try and locate her, does not meaningfully
    advance Gores case.

[27]

The
    information about Mr. Stewarts address in Ms. Bass original statement was not
    specific and there was no evidence that the adjuster or Gore sought more
    detailed information either during that interview or in a later telephone
    discussion with Ms. Bass. It is also significant that nowhere in the September
    20, 2010 letter does Gore seek information regarding Mr. Stewarts whereabouts.
    In these circumstances, where the only relevant information the insured could
    possibly have had was her sons current address, it was open to the motion
    judge to conclude that the failure of Ms. Bass to provide her own up-to-date
    address did not constitute a substantial failure to cooperate. Therefore, there
    is no basis for appellate interference with that finding.

(ii)

Relief from Forfeiture

[28]

Given
    my conclusion on the first issue, it is unnecessary to consider the question of
    whether the motion judge erred in his relief from forfeiture analysis. However,
    I would caution that the comments of the motion judge regarding relief from
    forfeiture, which were limited to the statement: given the minor nature of any
    possible breach of the policy, I would have granted relief from forfeiture, do
    not adequately capture what is required in a proper relief from forfeiture
    analysis. A judge considering such an application must first determine if the
    remedy is available and then apply the test articulated by LaForme J.A. in

Kozel
    v. The Personal Insurance Company
,
2014 ONCA 130, 119 O.R. (3d) 55, at
    para. 59.

Disposition

[29]

I
    would dismiss the appeal and award costs of the appeal to Allstate payable by
    Gore in the agreed-upon all-inclusive sum of $12,500.

Released: K.M.v.R. April 25, 2019

C.W.
    Hourigan J.A.

I agree. K.
    van Rensburg J.A.

I agree.
    Grant Huscroft J.A.


