By Felisia Milana
INTRODUCTION
The Ontario Court of Appeal upheld an auto-insurer’s denial of coverage to a mother-daughter duo who turned a motor vehicle accident into a case of civil fraud. The Court in Wong v Aviva insurance Company of Canada, 2024 ONCA 874[1] upheld the lower court’s analysis of Hryniak v Mauldin, 2014 SCC 7[2], to determine that lying to your insurer about the driver of the vehicle involved in an accident can constitute civil fraud.
FACTUAL BACKGROUND
On March 18, 2019, a motor vehicle collision occurred between Victoria Wong (Applicant / Appellant in This Action) and Natalie Robertson (the Plaintiff in the Main Action).[3] At the time of the accident, Wong believed that her license had expired and was afraid that she would face criminal sanctions. She called her mother and owner of the 2013 Toyota involved in the accident, Tieu, to attend the scene and to state that she had been the driver of the vehicle in the accident.[4] Tieu attended the scene, and together her and Wong went to the collision reporting centre to complete the necessary forms, specifically naming Tieu as the driver. These documents were all signed by Tieu. Later on, Wong called Aviva, pretending to be Tieu, and made the accident claim.[5]
Three months post-accident, Robertson commenced the Main Action against Tieu, and Aviva defended on Tieu’s behalf.[6] Tieu and Wong continued to misrepresent the truth of the accident to the police, Aviva, and her own counsel.[7] Aviva first learned of Tieu and Wong’s misrepresentations at Robertson’s examination for discovery, where Robertson disclosed that a young woman had been driving the other vehicle.[8]
Aviva denied coverage to both Tieu and Wong under the Policy and declined to defend or indemnify them against Robertson’s claim.[9] Aviva took an off-coverage position. They were appointed as a Statutory Third Party to the Main Action and filed a defence.[10]
In the lower court decision, Antoniani J. held that Wong violated the Aviva terms and conditions of the insurance policy and made material misrepresentations to Aviva and others.[11] Further, Antoniani J. held that the elements of civil fraud were met.[12] The Application was dismissed.
ISSUE ON APPEAL
Wong appealed Antoniani J.’s decision. The main issue heard at the Court of Appeal was whether Antoniani J. erred in finding that Wong’s conduct amounted to civil fraud.[13]
ANALYSIS
The Ontario Superior Court of Justice Decision
Antoniani J. held that Wong and Tieu’s actions amounted to civil fraud. The four elements of the tort of civil fraud were laid out by the Supreme Court of Canada in Hryniak and include:
- i. a false representation made by the defendant;
- ii. some level of knowledge of the falsehood of the representation on part of the defendant;
- iii. the false representation caused the plaintiff to act; and
- iv. the plaintiff’s actions resulted in a loss.[14]
I. A False Representation Made by the Defendant
There were several instances of false representations made by both Wong and her mother to Aviva. This included Wong representing herself as Tieu to Aviva, with Tieu’s consent, and represented Tieu to have been the driver of the motor vehicle in the collision.[15] The accident reports were all completed by Wong in Tieu’s name with Tieu’s signature.[16] Tieu also attended examinations for discovery under oath, and represented herself as the driver, while her daughter remained in the room and assisted her with answers.[17]
II. Some Level of Knowledge of the Falsehood of the Representation on Part of the Defendant
Wong admitted to being the driver of the motor vehicle and that she had called her mother to represent herself as the driver instead of complying with her obligation to assist.[18] Wong actively made calls to Aviva representing herself as Tieu, to claim Tieu was the driver of the vehicle. Wong further admitted to assisting her mother with answers during her examination for discovery.[19]
III. The Actions Caused Aviva to Act
The latter elements of the test were disputed by the Appellant. Although Wong admitted that her actions caused Aviva to defend Tieu in the Main Action, she argued that the collusion with Tieu had no impact on Aviva’s defence and suggested that the only issue in the Main Action is to the extent of Robertson’s damages.[20] The Appellant submitted that the credibility issues of Wong and Tieu had no impact on the outcome.[21]
Antoniani J. held that Wong and Tieu’s actions did cause Aviva to both Act and result in a loss.[22] Aviva had retained counsel to defend the action against Tieu, which ultimately was the incorrect defendant in the action.
IV. The Plaintiff’s Actions Resulted in a Loss
Aviva had spent over two years of litigation causing the expenditure of time and money to accumulate.[23] Due to the credibility issues brought on by Wong and Tieu, the entire proceedings were no longer of use to Aviva’s advantage and could only benefit Robertson to impugn Wong.[24] Since Aviva’s position in the Main Action litigation had been irreparably impacted, the repayment relief would not return Aviva to its original circumstance.[25]
On a balance of probabilities, Antoniani J. held that the elements of civil fraud had been met.[26]
THE ONTARIO COURT OF APPEAL DECISION
The only issue on appeal was the finding of civil fraud. The Appellant argued that the lower court’s decision was incorrect because Aviva suffered no quantifiable losses as a result of Wong’s actions. The Court of Appeal disagreed.[27]
The Court of Appeal held that it was beyond dispute that Aviva had suffered losses to date because of Wong’s actions.[28] Although the loss could not be quantified at the time of the hearing, the Court of Appeal pointed to the loss in terms of the manner in which Aviva could defend the action. They described this loss as a “real loss, not a speculative one.”[29]
The Court of Appeal quoted Antoniani J. at paragraph 34,
“[t]he entire proceedings to date are no longer of use except as they may be used by [the other driver] to impugn Wong. Aviva is at a disadvantage since the credibility of Wong has been significantly impacted.”[30]
No error was found in Antoniani J.’s reasons. The appeal was dismissed.[31]
TAKEAWAYS
The first two elements of the Hryniak tort of civil fraud test are typically straightforward to identify. Wong knowingly made a claim to Aviva based on a falsehood. The misrepresentation of the real identity of the driver in a motor vehicle accident cost Wong and Tieu much more than sanctions from driving with an expired driver’s license.[32]
The more debatable aspect of the civil fraud test is what can satisfy the latter two elements of causing the plaintiff to act, and the act resulting in a loss. The Court of Appeal has established that a quantifiable loss is not necessary for the tort of civil fraud to be met. A real loss can extend to include the manner in which an insurer defended the action, including considerations regarding the substantial legal costs, the time and effort invested in litigation and the strain on internal processes. The Court also explicitly considered prejudice to the insurer’s litigation position in acting on the false representation. The inability for the insurer to be restored to their original position was deemed a loss in the civil fraud analysis. This broadens the understanding of loss to include the burdens imposed by the manner in which litigation is carried out, not merely the financial outcome.
The Court’s decision in Wong demonstrates a potential for significant range in what non-quantifiable losses can be considered in establishing the tort of civil fraud.
[1] Wong v Aviva Insurance Company of Canada, 2024 ONCA 874 (CanLII). [ONCA Decision]
[2] Hryniak v Mauldin, 2014 SCC 7 (CanLII). [Hryniak]
[3] Wong v Aviva Insurance Company of Canada, 2024 ONSC 1111 (CanLII), para 2. [ONSC Decision]
[4] ONSC Decision, para 5.
[5] ONSC Decision, para 7.
[6] ONSC Decision, para 8.
[7] ONSC Decision, para 9.
[8] ONSC Decision, para 10.
[9] ONSC Decision, para 10.
[10] ONSC Decision, para 11.
[11] ONSC Decision, para 26.
[12] ONSC Decision, para 36.
[13] ONCA Decision, para 2.
[14] ONCA Decision, para 6, citing Hryniak, at para 87.
[15] ONSC Decision, para 29.
[16] ONSC Decision, para 29.
[17] ONSC Decision, para 29.
[18] ONSC Decision, para 31.
[19] ONSC Decision, para 31.
[20] ONSC Decision, para 33.
[21] ONSC Decision, para 33.
[22] ONSC Decision, para 37.
[23] ONSC Decision, para 36.
[24] ONSC Decision, para 34.
[25] ONSC Decision, para 36.
[26] ONSC Decision, para 37.
[27] ONCA Decision, para 7.
[28] ONCA Decision, para 9.
[29] ONCA Decision, para 9.
[30] ONCA Decision, para 8, citing ONSC para 34.
[31] ONCA Decision, para 10.
[32] According to Schedule 43 of the Highway Traffic Act (Last Updated July 1, 2024), the set fine for driving a motor vehicle without a currently validated permit, as per s.7(1)(a) of the Highway Traffic Act, is $125.00.
