Abarca et al. v. Vargas et al., (2015) 329 O.A.C. 163 (CA)

• Judge: Laskin, Rouleau and Lauwers, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: January 07, 2015
• Jurisdiction: Ontario
• Citations: (2015), 329 O.A.C. 163 (CA);2015 ONCA 4

Abarca v. Vargas (2015), 329 O.A.C. 163 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. JA.018

Teodoro Abarca, Magaly Abarca, Jorge Leiva by his Trustee in Bankruptcy, Mathew & Associates Ltd., Maria Leiva by her Trustee in Bankruptcy, Mathew & Associates Ltd. , and Brunilda Munoz (plaintiffs/appellants) v. Sandra Vargas, The Wawanesa Mutual Insurance Company and Economical Mutual Insurance Company (defendants/respondent) and The Wawanesa Mutual Insurance Company, added by order pursuant to s. 258(14) of the Insurance Act, R.S.O. 1990, c. I.8 (third party)

(C57916; 2015 ONCA 4)

Indexed As: Abarca et al. v. Vargas et al.

Ontario Court of Appeal

Laskin, Rouleau and Lauwers, JJ.A.

January 7, 2015.

Summary:

In 2007, the Leivas (plaintiffs) were passengers in a motor vehicle that was struck by the motor vehicle driven by Vargas (defendant). The plaintiffs et al. sued the defendant in negligence, alleging that she ran a red light. Although the defendant's insurance coverage was $1,000,000, her insurer (Wawanesa) argued that its liability was limited to the $200,000 statutory minimum limit because the defendant was driving while suspended. The plaintiffs had $1,000,000 underinsured motorist coverage through their own insurer (Economical). In 2010, the plaintiffs' counsel moved, without notice, to amend the statement of claim to add Wawanesa and Economical as defendants, to allow the plaintiffs to access the underinsured motorist coverage if necessary. The motions judge directed that the motion be heard in open court, with notice to the parties and proposed defendants, because there was an issue of whether the statutory limitation period, subject to discoverability, had expired. Rather than pursuing the motion, the plaintiffs' counsel commenced a new action in another judicial district, basically duplicating the first action, but adding the two insurers as defendants and another passenger as plaintiff. Economical moved to strike the second action as an abuse of process.

The Ontario Superior Court of Justice, in a judgment reported [2013] O.T.C. Uned. 6499, held that ignoring the motions judge's direction to bring the contested motion, and commencing the second action, constituted an abuse of process. Striking a portion of the statement of claim in the second action resulted in the plaintiffs possibly losing their underinsured motorist coverage claim due to the limitation period. The plaintiffs appealed.

The Ontario Court of Appeal allowed the appeal. The court agreed that it was an abuse of process for the plaintiffs to fail to follow the motion judge's direction to bring a contested motion to add the insurers as defendants in the first action. However, the motions judge erred in finding that bringing the second action against Economical was an abuse of process. In any event, the penalty imposed was disproportionately prejudicial to the plaintiffs. The abuse of process was minor and an appropriate remedy would have been costs consequences.

Practice - Topic 2239

Pleadings - Striking out pleadings - Grounds - Abuse of process or delay - The Leivas (plaintiffs) were passengers in a motor vehicle that was struck by the motor vehicle driven by Vargas (defendant) - The plaintiffs sued the defendant in negligence, alleging that she ran a red light - Although the defendant's insurance coverage was $1,000,000, her insurer (Wawanesa) sought to limit its liability to the $200,000 statutory minimum limit because the defendant was driving while suspended - The plaintiffs had $1,000,000 underinsured motorist coverage through their own insurer (Economical) - The plaintiffs' counsel moved, without notice, to amend the statement of claim to add Wawanesa and Economical as defendants, to allow the plaintiffs to access the underinsured motorist coverage if necessary - The motions judge directed that the motion be heard in open court, with notice to the parties and proposed defendants, because there was an issue of whether the statutory limitation period, subject to discoverability, had expired - Rather than pursuing the motion, the plaintiffs' counsel commenced a new action in another judicial district, basically duplicating the first action, but adding the two insurers as defendants and another passenger as a plaintiff - A motions judge held that ignoring the direction to bring the contested motion, and commencing the second action, constituted an abuse of process - Striking a portion of the statement of claim in the second action resulted in the plaintiffs possibly losing their underinsured motorist coverage claim due to the limitation period - The Ontario Court of Appeal allowed the plaintiffs' appeal - The court agreed that it was an abuse of process for the plaintiffs to fail to follow the motion judge's direction to bring a contested motion to add the insurers as defendants in the first action - However, the motions judge erred in finding that bringing the second action against Economical was an abuse of process - In any event, the penalty imposed for the minor abuse of process in failing to follow the direction was disproportionately prejudicial to the plaintiffs - Further, the motions judge failed to balance the technical requirements of the Rules of Civil Procedure and the interests of justice as embodied in the Civil Justice Act - The penalty was also not consistent with insurance law principles - The appropriate remedy would have been costs consequences - See paragraphs 20 to 45.

Cases Noticed:

Maynes et al. v. Allen-Vanguard Technologies Inc. et al. (2011), 274 O.A.C. 229; 2011 ONCA 125, dist. [para. 15].

Moulton Contracting Ltd. v. British Columbia et al., [2013] 2 S.C.R. 227; 443 N.R. 303; 333 B.C.A.C. 34; 571 W.A.C. 34; 2013 SCC 26, refd to. [para. 21].

Canam Enterprises Inc. v. Coles et al. (2000), 139 O.A.C. 1; 51 O.R.(3d) 481 (C.A.), refd to. [para. 21].

Schmitz et al. v. Lombard General Insurance Co. of Canada (2014), 315 O.A.C. 187; 118 O.R.(3d) 694; 2014 ONCA 88, refd to. [para. 32].

1196158 Ontario Inc. v. 6274013 Canada Ltd. et al. (2012), 295 O.A.C. 244; 112 O.R.(3d) 67; 2012 ONCA 544, refd to. [para. 34].

Taylor Made Advertising Ltd. v. Atlific Inc. et al. (2012), 294 O.A.C. 286; 111 O.R.(3d) 221; 2012 ONCA 459, refd to. [para. 34].

Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129; 286 N.R. 178; 158 O.A.C. 1, refd to. [para. 36].

Despotopoulos v. Jackson, [1992] I.L.R. 1645 (Ont. Gen. Div.), affd. [1996] O.J. No. 4185 (C.A.), refd to. [para. 38].

Romas v. Prudential Insurance Co. of Canada - see Despotopoulos v. Jackson.

Beausoleil et al. v. Canadian General Insurance Co. et al. (1992), 55 O.A.C. 383; 8 O.R.(3d) 754 (C.A.), refd to. [para. 38].

Chomos v. Economical Mutual Insurance Co. (2002), 162 O.A.C. 171; 61 O.R.(3d) 28 (C.A.), refd to. [para. 39].

Somersall v. Friedman et al., [2002] 3 S.C.R. 109; 292 N.R. 1; 163 O.A.C. 201; 2002 SCC 59, refd to. [para. 43].

Authors and Works Noticed:

Knutsen, Erik, Auto Insurance as Social Contract (2010-2011), 48 Alta. L.R. 715, pp. 716, 717, 739 [para. 37].

Counsel:

William G. Scott, for the appellants;

George Kanellakos and Kevin Lasko, for the respondent.

This appeal was heard on April 28, 2014, before Laskin, Rouleau and Lauwers, JJ.A., of the Ontario Court of Appeal.

On January 7, 2015, Lauwers, J.A., released the following judgment for the Court.