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SUBROGATION - Effect of - Subrogated party’s right to bring action

Monday, March 05, 2018 @ 8:55 AM  


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Appeal by the defendant from a judgment awarding the plaintiff $25,000 in damages on account of property damage sustained by the plaintiff’s vehicle during a collision. At the time of the collision, the defendant was operating the vehicle with the plaintiff’s permission. The defendant had asked to borrow the vehicle to attend a weekend wedding. The parties agreed the defendant, who was subsequently convicted of impaired driving causing bodily harm, was completely at fault for the accident. The plaintiff’s vehicle was damaged beyond repair. The plaintiff’s insurer settled his property damage claim and then commenced the within subrogated action against the defendant for recovery of the amount it paid to the plaintiff. The trial judge found a bailment relationship between the parties. He concluded their agreement impliedly obligated the defendant to return the vehicle to the plaintiff in the same condition it was loaned. He determined the claim was not prohibited by s. 263 of the Insurance Act because it was founded in its assertion of the plaintiff’s right of action under a bailment contract.

HELD: Appeal dismissed. The trial judge correctly identified the nature of the parties’ relationship as one of voluntary bailment and the parties’ respective rights and obligations. The trial judge did not err in law or mixed fact and law in allowing the plaintiff’s action on the basis that his right of action in bailment was not prohibited by s. 263 of the Insurance Act or in finding the defendant breached the terms of the parties’ bailment agreement. The operation of s. 263(5)(a.1) of the Act was not contingent on the existence of an agreement in respect of damages between the parties. The defendant’s breach of the terms of the parties’ bailment agreement constituted a right of action under an agreement for the purpose of s. 263(5)(a.1) of the Act, to the extent the defendant was at fault for the damage, which was consistent with the statutory scheme prescribed by s. 263. The defendant’s failure to return the vehicle in an undamaged state constituted a breach of the bailment agreement.

Burridge v. Hardy, [2018] O.J. No. 618, Ontario Superior Court of Justice, G.J. Verbeem J., January 9, 2018. Digest No. TLD-Mar52018002