Insurance law – Automobile insurance – Coverage – Policies and insurance contracts – Duties and liabilities of insurer – Right of insurer to subrogation – Appeals

2237446 Ontario Inc.(c.o.b. 409 Collision Centre (2011)) v. Intact Insurance, [2018] O.J. No. 2195, 2018 ONCA 394, Ontario Court of Appeal, April 24, 2018, C.W. Hourigan, G. Huscroft and I.V.B. Nordheimer JJ.A.

The insured’s vehicle was towed to a storage facility following a motor vehicle accident. The insurer advised it would pay actual cash value for the vehicle, rather than repair it. The next day the insured executed a storage agreement for the vehicle at $85 per day. The insurer was obliged to reimburse the insured for storage costs under the policy. However, the insurer and the insured could not agree on storage charges. The insurer applied for and received an initial certificate under s. 24 of the Repair and Storage Liens Act, R.S.O. 1990, c. R. 25 (the “RSLA”). The insurer had not paid the insured for the cost of the vehicle at the time it obtained the certificate. The insured failed to file an objection to the certificate within three days of receiving the certificate as required by the RSLA. Instead, the insured brought an application to have the certificate declared null and void on the basis that the insurer was not an owner or a “person lawfully entitled to” the vehicle because it had not paid the insured for the value of the vehicle.

The application judge found that the insurer had “assumed liability” under the contract of insurance and was subrogated to the rights of the insured under s. 278 of the Insurance Act, R.S.O. 1990, c. I.8. Therefore, the application was dismissed as the insurer was a “person lawfully entitled to” the vehicle and thus had the right to obtain the certificate.

The insured’s appeal was dismissed. The Court noted that the obvious intent of the RSLA is to provide an expeditious procedure for dealing with disputes over storage charges. The Court of Appeal rejected the insured’s argument as it would effectively require insurers to settle all matters arising out of a motor vehicle accident with its insured and make the resulting payment before it could avail itself of the remedies under the RSLA. Such an interpretation was not harmonious with the object of the RSLA, and did not reflect the realities of the marketplace in which the statute operated. Moreover, the Court noted that the decision did not visit any unfairness on the insured as it was fully protected against the storage charges while the propriety of those charges was determined.

This case was digested by Michael J. Robinson, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter.