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. 

[2014] 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.