Ontario (Finance) v. Traders General Insurance (Aviva Traders), 2018 ONCA 565 (CanLII)

The Court of Appeal determines whether the insurer properly terminated the policy of insurance on the vehicle at issue where the owner of the vehicle is not the named insured under the policy.  

Date Heard: November 9, 2017 | Full Decision [PDF]

This action arose out of a catastrophic accident involving a vehicle owned by Peter Leonard. The driver, a friend of Mr. Leonard’s son, was killed. The passenger, another friend, was seriously injured and sued the driver’s estate and Mr. Leonard for damages. Traders General Insurance, the insurer for the vehicle, did not defend the action on the basis that it had cancelled the owner’s policy for non-payment of premiums before the accident occurred. Judgment was entered for the plaintiff and paid for by the Motor Vehicle Accident Claims Fund. The Fund then sued Traders for unjust enrichment and repayment on the basis that Traders had not effectively terminated the policy.

The history of the insurance policy is as follows: In 1999, Anne Leonard purchased automobile insurance from GAN Canada Insurance for two motor vehicles, the ownership of which were actually registered under Mr. Leonard. Mrs. Leonard’s evidence was that had she been asked about ownership when she called for insurance, she would have answered truthfully. GAN’s notes about the call did not indicate that the representative asked about ownership; instead, information about the drivers, driver’s licence numbers, and VIN numbers was obtained. GAN was later acquired by Traders, who renewed the owner’s policy with Mrs. Leonard as the sole named insured.

In September 2001, Traders was unable to withdraw premiums from Mrs. Leonard’s account so it sent a notice of termination for failure to pay premiums dated September 21, 2001 to Mrs. Leonard. Mrs. Leonard did not tell Mr. Leonard that the insurance on his vehicles had been cancelled. Traders General later sent her a small refund of $12.94 by cheque dated October 10, 2011, which she cashed.

The accident occurred on November 10, 2001. Judgement for the plaintiff was obtained on March 27, 2003. The Fund paid the judgment on May 23, 2003. The Fund issued the Statement of Claim against Traders on December 11, 2008. At trial, Traders conceded that if GAN knew or should have known that Mr. Leonard was the registered owner of the vehicles insured under the policy, then the appellant was required to give him notice of termination of the policy. The trial judge accepted Ms. Leonard’s evidence that had she been asked by GAN, she would have advised that Mr. Leonard was the owner of the vehicles but that the question was not asked. GAN also failed to obtain a signed application form pursuant to section 232 of the Insurance Act. The trial judge therefore found that there was no misrepresentation, and that it was GAN that made the error by issuing the policy naming Mrs. Leonard as the insured. By definition under the Act, Mr. Leonard was an insured and Traders’ failure to give him notice of termination left the policy effective as of the date of the accident.

The Court of Appeal upheld the trial judge’s decision. The Court noted that section 233(3) of the Act governs when an automobile insurer may rely on a representation by an applicant for insurance: no statement of the applicant shall be used in defence of a claim under a contract unless it is in a signed application or in a purported application that is endorsed upon or attached to the policy. In this case, there was no written application. Therefore, the Court of Appeal concluded that there was no written or oral misrepresentation by Mrs. Leonard. The Court also confirmed that notice should have been sent to Mr. Leonard as the insured under the owner’s policy and as such, Traders was liable to the Fund for repayment. The appeal also dealt with other evidentiary issues and the Fund’s entitlement to bring the claim, which are not being summarized here.


Read the full decision [PDF]
Written by

Nga has practiced exclusively in personal injury since her call to the bar. Nga is very compassionate towards those who have suffered a loss and aims to guide clients through difficult legal processes. She is also dedicated to promoting access to justice for injured members of the Vietnamese community. With her fluent Vietnamese language skills, she hopes to lower the communication barriers faced by many injured members of her community and help them obtain appropriate compensation.


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