Case Comment: Hoang v. The Personal Insurance Company of Canada

Recently, the Ontario Superior Court of Justice considered indemnity and documentary disclosure obligations in the context of an action in which a plaintiff sought a declaration that the insurer of a defendant in an underlying action involving a motor vehicle accident was responsible for indemnifying its insured.

In Hoang v. The Personal Insurance Company of Canada, the underlying action arose as a result of an unfortunate pedestrian/motor vehicle accident involving 6-year-old Christopher Hoang.  After being dropped off on a city sidewalk by his father, Can Hoang (“Mr. Hoang”), Christopher proceeded to cross the street.  While in the process of doing so, a gust of wind blew Christopher’s hat off, which prompted him to run into the street to retrieve it when he was struck by a vehicle operated by Adriano Vicentini (“Mr. Vicentini”).  As a result of injuries he sustained in the accident, Christopher commenced an action against Mr. Hoang and Mr. Vicentini.

After two aborted attempts, a trial finally proceeded in which the jury found Mr. Hoang liable for the accident for discharging Christopher at an “unsuitable choice of unloading area”.  Mr. Vicentini avoided liability completely. As such, judgment was awarded against Mr. Hoang in the amount of $804,228.22, plus pre and post-judgment interest and costs. The trial decision is currently being appealed and is scheduled to be heard by the Court of Appeal on January 11, 2016.

After trial, Christopher, who sought to recover from Mr. Hoang’s insurer the amount of the judgment, commenced an action seeking a declaration pursuant to s. 258(1) of the Insurance Act that The Personal “is responsible to indemnify its insured” in respect of the judgment.  Within the context of this coverage action, a motion was brought for an Order compelling The Personal to produce its entire file relating to Mr. Hoang’s defence in the underlying action, as well as compelling a representative of The Personal to attend an Examination for Discovery for questioning in relation to the conduct of Mr. Hoang’s defence in the underlying action.

In the coverage action, which to the knowledge of the writer remains ongoing, The Personal takes the position that the damages awarded against Mr. Hoang are not insured under the terms of his automobile insurance policy.  Specifically, The Personal takes the position that Christopher’s injuries did not arise by virtue of Mr. Hoang’s use or operation of a motor vehicle, as Christopher had been safely dropped off on the sidewalk in the company of his older relatives, which broke any chain of causation linking the conduct of Mr. Hoang, as a motorist, to the accident.  The Personal also takes the position that there were intervening acts, including the wind blowing Christopher’s hat off and Christopher suddenly darting into traffic, which ultimately caused the accident.  As such, The Personal’s position is that notwithstanding the jury’s finding that Mr. Hoang made an “unsuitable choice of unloading area”, there was no finding that he was negligent in his capacity as a motorist.  Rather, it is argued that any liability on the part of Mr. Hoang is in his capacity as father and/or custodian of Christopher, as opposed to the driver of a motor vehicle. 

In considering Christopher’s request for an Order pursuant to s. 258(1) of the Insurance Act for payment of the amount of the judgment against Mr. Hoang from The Personal, the Court considered at what point a plaintiff “recovers” a judgment in the manner contemplated by s. 258(1).  Section 258(1) provides that:

Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy…may, upon recovering a judgment therefor…against the insured, have the insurance money payable under the contract applied in or toward satisfaction of the person’s judgment…

After reviewing relevant case law, the Court cited Parker v. Dirar, 2015 ONSC 4723 for the proposition that “The Insurance Act provision in s.258…makes it clear that a cause of action by a plaintiff against the defendant’s insurer arises only once the plaintiff has secured judgment against the insured”.  The Court therefore held that it would be premature to take irrevocable steps until it is clear that rights under s. 258 have been triggered. 

Regarding Christopher’s request for production of The Personal’s entire defence file in the underlying action, this was made based on the assertion that counsel retained by The Personal may have conducted Mr. Hoang’s defence in such a way so as to minimize The Personal’s exposure to indemnify Mr. Hoang under his insurance policy. In deciding this issue, the Court, which was mindful of the fact that the appeal in the underlying action is set to take place in January 2016, held that it would be reasonable to maintain the status quo with respect to access by counsel for the Plaintiff to the entire defence file. The Court stated that compared to any further delay in resolving the coverage issue, there was significantly more potential for irreversible harm, which could flow from access to the entire trial file of Mr. Hoang’s defence counsel. Specifically, the rationale was that if a new trial were ordered, it could result in irreversible harm to allow a party to see the entirety of their opponent’s files.

In light of the foregoing, the Court saw “no sufficient reason to permit premature disclosure prior to “the recovery” of a judgment”, which the Court viewed as not yet having occurred by virtue of the stay initiated by the appeal of the trial decision. The Court specifically held that there had yet to be a judgment that had been “recovered” for the purpose of s. 258 of the Insurance Act.  Rather, it is only once there is a final and binding judgment obtained that the provisions of section 258(1) are triggered. As such, Christopher’s motion was dismissed, but without prejudice for a future motion seeking similar relief after the Court of Appeal has dealt with the appeal of the underlying action.