RE: |
LAURA LOCKHARD (Plaintiff) – and – ANTONIO QUIROZ a.k.a. PABLO QUIROZ (Defendant (Appellant)) – and – C.A.A. INSURANCE COMPANY (ONTARIO) added by Order pursuant to Section 258(14) of the Insurance Act, R.S.O. 1990, c. I.8 (Third Party (Respondent)) |
BEFORE: |
FELDMAN, CRONK and BLAIR JJ.A. |
COUNSEL: |
David Cutler for the appellant, Antonio Quiroz |
Lianne Furlong for the respondent, C.A.A. Insurance Company (Ontario) |
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HEARD & RELEASED ORALLY: |
November 7, 2006 |
[1] The appellant appeals the motion judge’s decision to grant the respondent insurer summary judgment under the provisions of s. 258 of the Insurance Act, R.S.O. 1990, c. I.8 for reimbursement of settlement monies paid by the insurer to the plaintiff, who sued the appellant in negligence seeking damages for property and personal injury losses arising from a motor vehicle accident in which the appellant was driving the plaintiff’s car with her permission. The plaintiff’s insurer is the respondent insurance company. The appellant was an insured under the plaintiff’s policy because he drove her car with her permission.
[2] In this case, the insurer successfully obtained an order adding it as a third party in the plaintiff’s pending personal injury action against the appellant. Thereafter, the insurer settled all the plaintiff’s claims. Although the insurer provided advance notice to the appellant of the intended settlement, the appellant neither consented to, signed, or otherwise authorized the settlement.
[3] On consent, a judgment in favour of the plaintiff was obtained against the insurer as part of the settlement. However, no judgment was obtained against the appellant insured, the driver of the vehicle at the time of the accident in question.
[4] The motion judge held that the insurer had an absolute liability to settle the plaintiff’s claims pursuant to s. 258(4) of the Act. He also concluded that the insurer was entitled under s. 258(13) to be reimbursed by the appellant driver for the settlement amount, costs and interest. In so holding, the motion judge stated:
I reject Mr. Quiroz’s argument that s. 258(1) refers to a requirement that CAA obtain a judgment in order to have the right to [recoup] monies paid to the Plaintiff Lockhard. The section refers to a person having a claim, as does s. 258(4) [emphasis in original].
[5] With respect, we disagree. Section 258(1) of the Act provides:
Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy, even if such person is not a party to the contract, may, upon recovering a judgment therefor in any province or territory of Canada against the insured, have the insurance money payable under the contract applied in or towards satisfaction of the person’s judgment and of any other judgments or claims against the insured covered by the contract and may, on the person’s own behalf and on behalf of all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied [emphasis added].
[6] The plain language of s. 258(1) provides for the application of insurance money in or towards satisfaction of a judgment recovered against the insured, in this case, the appellant. Absent an agreement between the insurer and the insured to the contrary as, for example, concerning the application of insurance proceeds (see Co-operative Fire & Casualty Co. v. Ritchie, [1983] 2 S.C.R. 36), the recovery of such a judgment is a prerequisite to any entitlement under s. 258(1) to access available insurance monies.
[7] No judgment was obtained against the appellant insured. The insurer argues that the authority provided to an insurer under O.A.P. No. 1, the standard motor vehicle policy then in use in Ontario, to settle a case without an insured’s consent, is tantamount to a contractual agreement by the insured to reimburse the insurer for any settlement monies paid. We reject this contention. Section 3.3.1 of O.A.P. No. 1 authorizes an insurer to settle directly a plaintiff’s claims against an insured with or without an insured’s consent. What it does not do is permit an insurer to thereby bind the insured to a judgment against the insured at the instance of the insurer itself for the amount of the settlement paid. Stated somewhat differently, nothing in O.A.P. No. 1 constitutes an agreement by an insured to the reasonableness of a settlement made under s. 3.3.1.
[8] The cases relied upon by the insurer do not assist its position. These cases were predicated on either a specific agreement between the insurer and the insured on the terms of settlement, or an actual or deemed judgment recovered against the insured: see Co-operative Fire & Casualty Co. v. Ritchie, supra, and Campanaro v. Kim (1999), 41 O.R. (3d) 545 (C.A.). That is not this case.
[9] Nor does s. 254 of the Act assist the insurer on the facts here. That section contemplates an express non-waiver or reimbursement agreement between an insurer and its insured concerning amounts paid by the insurer to a third party in respect of a claim or judgment against the insured. But no such agreement was entered into in this case; nor, as we have indicated, do the terms of O.A.P. No. 1 constitute such an agreement concerning settlement monies paid by an insurer in relation to a personal injury claim against an insured.
[10] In our view, the scheme envisaged by s. 258 of the Act, in combination with O.A.P. No. 1, contemplates the balancing of an insurer’s right to minimize its exposure to a tort claimant with an insured’s right, in the absence of an agreement between the insurer and the insured or a judgment against the insured, to be protected against unreasonable settlements by its insurer.
[11] In the circumstances of this case, therefore, summary judgment against the appellant was not available. The appeal is allowed. The summary judgment below is set aside with costs to the appellant, on the partial indemnity scale, here and below, fixed in the total amount of $13,500, inclusive of disbursements and GST.
“K. Feldman J.A.”
“E.A. Cronk J.A.”
“R.A. Blair J.A.”