Kozel v. Personal Insurance Co., (2014) 315 O.A.C. 378 (CA)

• Judge: Rosenberg, MacPherson and LaForme, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: January 08, 2014
• Jurisdiction: Ontario
• Citations: (2014), 315 O.A.C. 378 (CA);2014 ONCA 130

Kozel v. Personal Ins. (2014), 315 O.A.C. 378 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. FE.017

Barbara Kozel (respondent) v. The Personal Insurance Company (appellant)

(C57167; 2014 ONCA 130)

Indexed As: Kozel v. Personal Insurance Co.

Ontario Court of Appeal

Rosenberg, MacPherson and LaForme, JJ.A.

February 19, 2014.

Summary:

In February 2012, Kozel severely injured a motorcyclist in an automobile accident in Florida. At the time of the accident, she was driving with an expired license. As a result, Kozel was in breach of statutory condition 4(1) of her insurance policy, and the insurance company advised her of a possible denial of personal injury coverage. In the meantime, the injured motorcyclist commenced a tort action against Kozel in Florida. Kozel applied for a declaration that the insurance company owed a duty to indemnify her and defend her in a third-party action under her contract of insurance.

The Ontario Superior Court of Justice, in a decision reported at [2013] O.T.C. Uned. 2670, allowed the application and ordered that the insurance company had both a duty to defend and a duty to indemnify Kozel under her motor vehicle liability insurance policy with respect to the action brought against her. The order included the requirement that the insurance company reimburse Kozel for all costs incurred by her in defending the Florida action. The insurance company appealed.

The Ontario Court of Appeal dismissed the appeal.

Equity - Topic 1068

Equitable relief - Relief from forfeiture - Grounds for relief - [See second Insurance - Topic 5091 ].

Insurance - Topic 3143

Payment of insurance proceeds - Actions - Relief against forfeiture - Imperfect compliance with statutory conditions - Driver's licence - [See second Insurance - Topic 5091 ].

Insurance - Topic 5091

Automobile insurance - Compulsory government schemes - Exclusions - Lack of authority or qualification to drive (incl. valid driver's licence) - In February 2012, Kozel severely injured a motorcyclist in an automobile accident in Florida - At the time of the accident, she was driving with an expired license - As a result, Kozel was in breach of statutory condition 4(1) of her insurance policy, and the insurance company advised her of a possible denial of personal injury coverage - In the meantime, the injured motorcyclist commenced a tort action against Kozel in Florida - Kozel applied for a declaration that the insurance company owed a duty to indemnify her and defend her in a third-party action under her contract of insurance - The application judge allowed the application and ordered that the insurance company had both a duty to defend and a duty to indemnify Kozel under her motor vehicle liability insurance policy with respect to the action brought against her - The application judge found that, because the offence of driving without a valid license was one of strict rather than absolute liability, a due diligence defence was available to Kozel - He then held that Kozel exercised sufficient diligence and was not in breach of statutory condition 4(1) - The Ontario Court of Appeal disagreed that the defence of due diligence was available to Kozel - The application judge misapprehended the evidence - At best, Kozel's evidence demonstrated that she took all reasonable care in connection to her vehicle plate renewal - It did not show that she acted with reasonable care or operated under a reasonable misapprehension of the relevant facts in connection with her driver's license - In the result, the court dismissed the appeal because Kozel was entitled to relief from forfeiture - See paragraphs 14 to 27.

Insurance - Topic 5091

Automobile insurance - Compulsory government schemes - Exclusions - Lack of authority or qualification to drive (incl. valid driver's licence) - In February 2012, Kozel severely injured a motorcyclist in an automobile accident in Florida - At the time of the accident, she was driving with an expired license - As a result, Kozel was in breach of statutory condition 4(1) of her insurance policy, and the insurance company advised her of a possible denial of personal injury coverage - In the meantime, the injured motorcyclist commenced a tort action against Kozel in Florida - Kozel applied for a declaration that the insurance company owed a duty to indemnify her and defend her in a third-party action under her contract of insurance - The application judge allowed the application and ordered that the insurance company had both a duty to defend and a duty to indemnify Kozel under her motor vehicle liability insurance policy with respect to the action brought against her - The insurance company appealed - The Ontario Court of Appeal dismissed the appeal - At issue was whether Kozel's breach (the failure to hold a valid driver's license), constituted imperfect compliance with a policy term, rather than non-compliance with a condition precedent - Kozel's breach of statutory condition 4(1) was not non-compliance with a condition precedent - There were no grounds to believe that 4(1) was a fundamental term or that Kozel's breach was of a fundamental nature - This was relatively minor breach - Consequently relief from forfeiture was available under s. 98 of the Court of Justice Act (CJA) - If the court were to allow the appeal, the insurance company would enjoy a large windfall at the expense of an individual who acted in good faith and whose breach caused no prejudice to the company - This result would be contrary to fundamental notions of equity - The court agreed that relief was not available under s. 129 of the Insurance Act - Section 129 was restricted to instances of imperfect compliance with terms of the policy after a loss had occurred - It had no application to cases where the breach occurred before the loss - See paragraphs 28 to 71.

Trials - Topic 1172

Summary convictions - Strict liability offences - Defence of due diligence or error of fact - [See first Insurance - Topic 5091 ].

Cases Noticed:

Lévis (City) v. Tétreault, [2006] 1 S.C.R. 420; 346 N.R. 331; 2006 SCC 12, refd to. [para. 16].

Tut v. RBC General Insurance Co. et al. (2011), 285 O.A.C. 100; 2011 ONCA 644, refd to. [para. 17].

Saskatchewan River Bungalows Ltd. and Fikowski v. Maritime Life Insurance Co., [1994] 2 S.C.R. 490; 168 N.R. 381; 155 A.R. 321; 73 W.A.C. 321, refd to. [para. 29].

Ontario (Attorney General) v. 1140 Aubin Road, Windsor et al. (2011), 279 O.A.C. 268; 2011 ONCA 363, refd to. [para. 29].

Elance Steel Fabricating Co. v. Falk Bros. Industries Ltd. and Canadian Surety Co., [1989] 2 S.C.R. 778; 99 N.R. 228; 80 Sask.R. 22, refd to. [para. 30].

Stuart v. Hutchins et al. (1998), 113 O.A.C. 12; 40 O.R.(3d) 321 (C.A.), refd to. [para. 33].

Williams v. York Fire & Casualty Insurance Co. (2007), 225 O.A.C. 157; 2007 ONCA 479, refd to. [para. 34, footnote 1].

Commander Construction v. Sovereign General Insurance Co. et al., 2013 ONSC 7104, refd to. [para. 34, footnote 1].

Sage v. Peel Mutual Insurance Co., [2005] O.T.C. Uned H07; 32 C.C.L.I.(4th) 110 (Sup. Ct.), refd to. [para. 34, footnote 1].

Canadian Newspapers Co. v. Kansa General Insurance Co. et al. (1996), 93 O.A.C. 26; 30 O.R.(3d) 257 (C.A.), refd to. [para. 45].

Colliers McClocklin Real Estate Corp. v. Underwriters, Lloyd's London (2004), 249 Sask.R. 187; 325 W.A.C. 187; 10 C.C.L.I.(4th) 1; 2004 SKCA 66, refd to. [para. 46].

Marche et al. v. Halifax Insurance Co. (2005), 330 N.R. 115; 230 N.S.R.(2d) 333; 729 A.P.R. 333; 2005 SCC 6, refd to. [para. 48].

Williams Estate v. Revere (Paul) Life Insurance Co. (1997), 101 O.A.C. 280; 34 O.R.(3d) 161 (C.A.), refd to. [para. 61].

Day Estate et al. v. Pandurevic et al., [2008] O.A.C. Uned. 717; 61 C.C.L.I.(4th) 50; 2008 ONCA 266, refd to. [para. 63].

Shiloh Spinners Ltd. v. Harding, [1973] A.C. 691 (H.L.), refd to. [para. 68, footnote 2].

Statutes Noticed:

Courts of Justice Act, R.S.O. 1990, c. C-43, sect. 98 [para. 8 et seq.].

Insurance Act, R.S.O. 1990, c. I-8, sect. 129 [para. 32].

Counsel:

Todd J. McCarthy, for the appellant;

David A. Zuber, for the respondent.

This appeal was heard on January 8, 2014, by Rosenberg, MacPherson and LaForme, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by LaForme, J.A., on February 19, 2014.