Case Summary: Aviva Insurance Company v Wawanesa Mutual Insurance Company

Defence + Indemnity

April 2020 For the purposes of determining the priority of insurers in the overlapping coverage situation with rental vehicles, the Court must first determine who the "lessee" is. This may not always be determined by the rental agreement alone, especially where an agency is involved.

Aviva Insurance Company v Wawanesa Mutual Insurance Company, 2019 ONCA 704, per Fairburn, J.A.

Facts + Issues

On 29 October 2010, the Plaintiff Liu was rear-ended by a vehicle driven by the Defendant Mahamood, which was rented from New Horizons Car Truck Rentals. Mahamood was in the process of doing furniture deliveries for Fine Furnishings. Liu sued Mahamood, Fine Furnishings and New Horizons Car Truck Rentals in vehicular negligence.

Mahamood did not have any insurance of his own. Fine Furnishings was insured by Wawanesa. New Horizons Car Truck Rentals was insured by Aviva. The issue was as to which insurer (as between Aviva and Wawanesa) was the first loss insurer under the Ontario Insurance Act, R.S.O. 1990 c. I.H, section 277(1.1).

Mahamood was a college student who delivered furniture for Fine Furnishings, which was owned and operated by Mehta. Mahamood signed a "subcontractor agreement". Mahamood believed that he was both an employee and an independent contractor of Fine Furnishings. Mahamood did not work for any other employer, he did not pay any truck rental fees and he did not own a credit card. He could refuse a furniture delivery but when he did agree to do one, he ended up renting a truck from New Horizons because Fine Furnishings had an account there.

The Court accepted the evidence of Mahamood regarding the following facts (paragraph 31):

Fine Furnishings instructed him to rent vehicles from New Horizons for the purposes of completing Fine Furnishings' deliveries; Fine Furnishings did not permit him to use the rental vehicles for any purpose other than making deliveries to its customers; Fine Furnishings paid for the cost of fueling the rental vehicles; Mr. Mahamood never paid New Horizons directly for the rental vehicles, as they were always billed to the credit card on file for Fine Furnishings; and When he called to reserve the rental vehicle for October 29, 2010, Mr. Mahamood told New Horizons that he would be picking it up on behalf of Fine Furnishings. On the date of the accident, Mahamood rented the truck from New Horizons. He did not provide the rental company with a credit card. New Horizons had an account for Fine...