The defendant’s negligent motor vehicle maintenance led to a fire and damage to the plaintiffs’ garage. The defendant was the plaintiffs’ son and an unnamed insured on their home owner's insurance policy. The plaintiffs’ insurer sued to subrogate and claim against the defendant’s motor vehicle insurance. The court concluded that because the defendant was an unnamed insured under the policy and because the definition of insured under the portion of the policy covering fire loss included the defendant, the insurer was not entitled to sue its own insured for losses paid out, despite the insured’s negligence.
 O.J. No. 1813
2014 ONSC 2337
Ontario Superior Court of Justice
H. MacLeod-Beliveau J.
April 11, 2014
The plaintiffs are a married couple and the defendant is their 21-year-old son. The plaintiffs and the defendant lived together in a home that included a sizable detached garage stocked with car hoists, tools, and miscellaneous equipment. The defendant was the owner of a motor vehicle and the defendant often performed maintenance work on his vehicle in the garage. Unfortunately, a fire started one night while the defendant was working on his vehicle. The fire spread from the vehicle and caused substantial damage to the structure of the garage.
The plaintiffs’ homeowner’s insurance policy included fire loss in the general list of insured property loss perils. The policy did not specifically define insured. Rather, the policy defined “you” and “your” as referring to the insured and used this definition across all portions of the policy. The parties accepted that the defendant was an unnamed insured under the policy and therefore subject to the terms and conditions of the policy.
Two issues arose. First, whether the defendant was negligent. Second, if negligence was established, whether the plaintiffs’ home owner’s insurance company was entitled to subrogate their claim against the defendant’s motor vehicle insurance company.
The court found that the defendant was negligent. The plaintiffs argued that the fact that vehicles do not normally catch fire was prima facie evidence of the defendant’s negligence and that the burden should shift to the defendant. The court noted that the plaintiffs were effectively making a res ipsa loquitur argument – a doctrine that was laid to rest by the Supreme Court of Canada – but agreed that the nature and origin of the fire spoke to negligence and placed an evidentiary burden on the defendant to challenge the inference. The defendant did not present any evidence to challenge the expert evidence presented by the plaintiffs, and the court ultimately accepted the plaintiffs’ expert evidence.
With respect to the subrogation issue, the court found for the defendant. As an unnamed insured captured by the definition of “you” and “your” used across the entire policy, including the section covering fire loss, the defendant enjoyed equivalent coverage to the plaintiffs. Absent ambiguity, the definition in the policy prevailed. As well, the defendant had an insurable interest in the loss which existed absent legal ownership. Finally, the court stated that as an insurer could not sue any of its insured for losses paid out under a policy, no matter how negligent the insured was in causing the loss, the action could not succeed.
The plaintiffs sought to rely on Morawietz v. Morawietz (1986), 18 C.C.L.I. 108 (Ont. CA), where parents brought a subrogated claim for the loss caused by their son. However, the court confined Morawietz to the situation where the definition of “insured” varied between different sections of the insurance policy, and where the loss was specifically claimed and paid out under a section in which the individual who caused the loss was not an “insured”, despite being an “insured” as per the definition under and pertaining to a different section.