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Ontario’s “no fault” insurance bars subrogated tort claims brought by U.S.-based insurers: Appeal Court


October 5, 2007   by Canadian Underwriter


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The Ontario Court of Appeal has upheld that Ontarios no-fault auto insurance regime prohibits all tort actions for recovery of property damage against a negligent party including subrogated claims brought by insurers.
In Clarendon National Insurance v. Candow, Signothahack Bounthai, a Brampton, Ontario resident, is the owner-operator for an American trucking company located in Texas. His tractor was insured by double policies of insurance, as is common for trucks that travel through multiple jurisdictions.
Clarendon National Insurance provided physical damage coverage for the truck and American Home Assurance provided liability coverage.
Clarendon is a national insurance company located in and governed by the laws of the United States. It is not a licensed insurance carrier under the provisions of Ontarios Insurance Act and did not file with the Superintendent of Financial Services an undertaking to be bound by the provisions of s. 263 of the Insurance Act.
Bounthai was involved in a collision with the appellants on Highway 401 in Toronto. Clarendon paid for the damage to the truck, but, since Bounthai was not at fault, Clarendon sought to recover its losses from the driver of the at-fault vehicle.
The trial judge allowed Clarendon to proceed with the subrogated claim. The trial judge interpreted an exclusion clause in s. 263 (5)(b) of the provinces Insurance Act in a way that allowed Clarendon to proceed because under that clause, the trial judge noted, Clarendon had not actually paid for the damage to Bounthais vehicle under s. 263.
But the Ontario Court of Appeal barred the subrogated claim.
An insurers right to bring a subrogated action is dependent on the existence of a cause of action by the insured, Ontario Court of Appeal Justice Russell Juriansz wrote for the Appeal Court.
Since s. 263(5)(a) of Ontarios Insurance Act extinguishes an insureds right to recover property damage from a tortfeasor, his or her insurer cannot have a subrogated right to recover property damage from a tortfeasor, Juriansz added. Therefore, Clarendon has no right to bring a subrogated tort claim in this case.