At our weekly meeting, Chris MacDonald discussed a decision of the Ontario Court of Appeal, Aviva Canada Inc. v. 1843538 Ontario Inc., 2020 ONCA 581.
In this case, the Court considered an appeal by the appellants, 843538 Ontario Inc., c.o.b. Mississauga Collison Centre, and/or McLaren Collison, Fady Rony Warda, Rony Amanuel Warda, (“the Wardas”) of an order of the motion judge dismissing their motion to dismiss the respondent’s claim under rules 20 (summary judgment) and 21 (determination of an issue before trial) of the Rules of Civil Procedure, and striking paragraphs of their statement and of defence and counterclaim under rule 25.
In 2017, Aviva Canada conducted an investigation to study fraud in the auto collision industry. Aviva insured two vehicles purchased by its wholly-owned subsidiary. The subsidiary intentionally damaged the vehicles and sent them for repair at the Warda’s body shop after Aviva had completed an initial appraisal of the damage.
Aviva conducted a second appraisal after the vehicles were repaired by the body shop. Based upon this appraisal, Aviva claimed that the body shop had caused further damage to the vehicle in order to perform additional repairs, and had refinished or replaced parts that did not require any repair.
Aviva subsequently initiated an action against the Wardas and the shop’s auto damage appraiser.
Later in the proceeding, the motion judge considered three concurrent motions to determine:
1. Should Aviva’s statement of claim be struck against the Wardas and/or the shop’s appraiser under rule 21 based upon the doctrine of ex turpi causa?
2. If the claim should not be struck, was the shop’s appraiser entitled to summary judgment under rule 20?
3. If the appraiser was not entitled to summary judgment, had Aviva established that paragraphs within the defendants’ statement of defence and crossclaim should be struck under rules 21 and/or 25?
Findings of the Motion Judge
1. Should Aviva’s claim be struck under rule 21 under the doctrine of ex turpi causa?
The doctrine of ex turpi causa provides that a party cannot rely on its own immoral or illegal actions to ground a claim. To successfully strike Aviva’s claim under thisdoctrine, the defendants first had to show the existence of an underlying illegal or immoral act, and second that Aviva stood to profit from this illegal or immoral act.
At the hearing, the defendants could not establish that Aviva committed Criminal Mischief under section 430(1) of the Criminal Code by damaging the vehicles, or that the company had breached section 233 Ontario Insurance Act by accepting a fictitious claim made by its subsidiary for the damage caused.
Further, the motion judge found that even if Aviva’s conduct could be considered illegal or immoral, it was not apparent that an award of damages to Aviva in this action would amount to “profit”.
The motion judge dismissed the defendants’ motion to strike Aviva’s claim, finding it was not plain and obvious that ex turpi causa applied so as to preclude Aviva’s claim.
2. Was the body shop’s appraiser entitled to summary judgment under rule 20?
On a motion for summary judgment, the Court must determine if there is a genuine issue for trial. Here, the Court determined that there were multiple questions both of liability and damages that required further evidence and, as such, were genuine issues for trial. Accordingly, the motion for summary judgment was dismissed.
3. Should paragraphs in the defendants’ statement of defence and crossclaim be struck under rules 21 and 25?
The motion judge concluded that one paragraph within the shop appraiser’s statement of defence and counterclaim should be struck as it amounted to evidence.
The motion judge also found that two paragraphs of the Warda’s statement of defence and counterclaim should be struck, as the claims of “entrapment” alleged therein had not had not been recognized in civil case law and, in any event, did not apply to this case.
Findings of the Court of Appeal
The Court of Appeal considered whether the motion judge’s order dismissing the Warda’s motion to dismiss Aviva’s claim under rule 21 and strike paragraphs of their statement of defence and counterclaim under rule25 was made in error.
The Court concluded that the motion judge made no error in permitting Aviva’s claim to proceed, as the law on the doctrine of ex turpi causa was correctly interpreted and applied. As such,these findings were entitled to deference.
Additionally, the Court found that the appellants were entitled to amend the two paragraphs that previously been struck by the motion judge, on the basis that the appellants did not intend to rely on a claim of “entrapment”, and Aviva had consented to the proposed amendments.