Ontario auto insurers received some bad news last week from the Court of Appeal . In Loftus v. Security National Insurance Company, the Court upheld the ruling of Mr. Justice Barry MacDougall, which we reported on a little over a year ago.
The plaintiff was injured in a 2001 MVA when her car was struck by a vehicle driven by an uninsured motorist who was being chased by the police. She sued her own insurer, Security National, pursuant to the uninsured motorist coverage. She also sued the uninsured driver, but he did not defend.
Security National, which did defend, also brought third party proceedings against local police authorities, alleging that negligence on their part contributed to the accident. The question before the Court was whether, assuming negligence on the part of the police (who were insured), Security National was liable to the plaintiff, given her failure to sue the police. The Court of Appeal agreed with Justice MacDougall, that the answer was “Yes”.
Security National relied on s. 2(1)(c) of the Uninsured Automobile Coverage Schedule, a regulation under the Insurance Act. It provides as follows:
2. (1) The insurer shall not be liable to make any payment,
(b) where a person insured under the contract is entitled to recover money under any valid policy of insurance other than money payable on death, except for the difference between such entitlement and the relevant minimum limits determined under clause (a);
(c) where the person insured under the contract is entitled to recover money under the third party liability section of a motor vehicle liability policy.
(Subsection (b), quoted above, was revoked in 2003 but was in force at the time of the 2001 accident giving rise to this claim.)
The Court had some concerns about whether it could adjudicate this issue based on agreed facts, since some facts seemed actually to be disputed. However, the Court concluded that it could decide the case without relying on any disputed facts.
In a nutshell, it held that the words, “entitled to recover”, which appear in s. 2(1)(b) and (c), quoted above, mean, entitled to recover in fact. It held that in most cases, an injured plaintiff need not sue all potential joint tortfeasors in order to have recourse to her uninsured automobile coverage. Exceptions would be “where the joint tortfeasor’s insurer admits liability to pay or where the injured insured obtains a judgment against the joint tortfeasor”. The basis on which the Court of Appeal reached its decision involved principles of statutory interpretation which we have not summarized here.
The end result though, is that where the negligence of an uninsured driver causes injury, the victim can pursue recovery against his or her insurer, under the uninsured automobile coverage, without having to sue other potential tortfeasors who are insured. The uninsured insurer is not entitled to commence third party proceedings against those other tortfeasors because the insurer is not, itself, a tortfeasor and so, cannot make a contribution claim under the Neglignec Act. And the Insurance Act only confers a right of subrogation against the uninsured motorist himself or herself.
(Security National, in this case, had brought third party proceedings against the police, but conceded on the argument of the appeal, that those claims could not succeed.)
So, potentially, as long as a negligent uninsured driver bears some share of liability for an accident, the injured plaintiff is entitled to ignore other potential insured tortfeasors (unless they have admitted liability) and pursue a claim only agaisnt his or her own insurer. The insurer might very well be left with no way of distributing the loss among others who were responsible.