This issue was dealt with recently in the Superior Court decision Lica v. Dhaliwal, 2015 ONSC 3888 released July 29, 2015.

Contrary to the recitals in the Reasons for Decision, the Plaintiff was represented on the motion by Hollie Nicol, not Marc Flisfeder.

The Plaintiff commenced an action against the Defendants after sustaining injuries in a motor vehicle accident.  State Farm Mutual Automobile Insurance Company ("State Farm") had itself added as a statutory Third Party in the action pursuant to s. 258(14) of the Insurance Act.  The effect of being added as a statutory Third Party reduces the limits available to the Plaintiff from the Defendants' insurer to the amount of $200,000.00.  The Plaintiff made a claim for under insurance coverage from his own insurer, Intact Insurance Company ("Intact") pursuant to the OPCF 44 endorsement.  The Plaintiff required detailed information from State Farm with respect to its coverage position to the Defendant in order for the Plaintiff to present its claim to Intact Insurance for underinsured coverage.  The issue in the case was whether State Farm was obligated to provide to the Plaintiff detailed information regarding its coverage position with the Defendant.

Justice Price concluded that the effect of section 258(11) of the Insurance Act is to reduce the limits of the policy of the at fault motorist to the statutory minimum where it is determined there has been a breach of a policy condition "by operation of the law" and until there is a finding to that effect State Farm's allegation of a policy breach by the Defendant is only unproven allegation.

It was acknowledged by Justice Price that the Plaintiff was not challenging State Farm's coverage position with the Defendant, but rather seeking evidence as to State Farm's reasons, so that the Plaintiff and the court could determine whether coverage was denied "by operation of law" for the purpose of the Plaintiff's claim against Intact for OCPF44R coverage.

Justice Price considered the interplay between Rule 31.06(4) which provides, inter alia, for disclosure of the insurance limits and "any conditions affecting its availability", Rule 31.06(5) which provides that no information concerning the insurance policy is admissible into evidence unless it is relevant to an issue in the action and Rule 31.06(6) which allows a party to bring a motion for leave to withhold the information.  Justice Price concluded that the information the Plaintiff sought from State Farm was relevant to the Plaintiff's OPCF44 action against Intact and producible in accordance with Rules 31.06(4) and (5) unless State Farm moved by way of motion pursuant to Rule 31.06(6) for leave of the court to withhold the information.

In the result, Justice Price ordered State Farm to provide the information sought by the Plaintiff regarding its coverage position with the Defendant unless State Farm feels the information will prejudice the defence of the Defendant or raise an issue of privilege.  In that case State Farm could seal its answers and tender them to Justice Price for review for a determination pursuant to Rule 31.06(6) on whether this information should be withheld.

State Farm is currently seeking leave to appeal the decision of Justice Price.

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