Published in: Insurance Law Newsletter - 13.Oct.20 October 13, 2020

Case Summary: ‘Till liability do us part: wedding bartender’s joint liability results in deduction for underinsured motorist coverage

Underinsured motorist coverage allows deduction of available insurance proceeds from jointly liable parties

Insurance law – Automobile insurance – Underinsured motorist – Third parties – Subrogation – Right of insurer to subrogation – Practice – Leave to appeal – Jury trials

Tuffnail v. Meekes, [2020] O.J. No. 2371, 2020 ONCA 340, Ontario Court of Appeal, June 1, 2020, A. Hoy A.C.J.O., D.H. Doherty J.A. and F.N. Marrocco A.C.J.S.J. (ad hoc)

The plaintiff was injured in a single vehicle collision after leaving a wedding at which the driver was served alcohol. The plaintiff claimed against the driver and the groom for hosting the wedding. The groom advanced a third party claim against the bartender. The plaintiff also pursued a claim against his insurer, State Farm, for underinsured motor coverage under the OPCF 44R endorsement. In turn, State Farm pursued a subrogated claim against the bartender under section 20 of the OPCF 44R.

At trial, the jury apportioned fault 65% to the driver, 20% to the groom, 11% to the bartender, and 4% to the plaintiff. The award exceeded the defendants’ aggregate insurance coverage. The trial judge ordered State Farm to pay the plaintiff the limits of his OPCF 44R coverage. The trial judge determined that the proceeds of the bartender’s insurance was not deductible from the OPCF 44R coverage, because the bartender’s insurance was not “available” to the plaintiff within the meaning of section 7 of the OPCF 44R.

State Farm appealed on the basis that the bartenders’ insurance proceeds were available to the plaintiff and should be deducted from the amounts owing to the plaintiff under the OPCF 44R. The plaintiff and State Farm both appealed the trial judge’s order that State Farm share any amounts it recovers by way of subrogation with the plaintiff until the plaintiff received full indemnification under the OPCF 44R.

On appeal, the Court considered section 7 of the OPCF 44R, which provides that amounts payable by the insurer are in excess to amounts available to the claimant from “the insurers of a person jointly liable with the inadequately insured motorist”. The plaintiff argued that the bartender was only a third party, and not a defendant, and therefore the bartender was not jointly liable to the plaintiff. However, the Court reasoned that State Farm’s subrogated action was advanced on behalf of the plaintiff. Accordingly, although the plaintiff did not name the bartender as a defendant, State Farm’s subrogated claim put the bartender’s liability to the plaintiff in issue. The trial judge had found that State Farm had a right of subrogation against the bartender, which necessarily meant that the bartender was jointly liable with the driver.

With respect to the parties’ appeal of the order that State Farm share subrogation proceeds with the plaintiff, the Court confirmed that an insurer generally stands behind its insured at common law. In the absence of a statutory or contractual term to the contrary, the insurer’s right of subrogation does not arise until the insured has been fully indemnified for both insured and uninsured losses. Section 278 of Ontario’s Insurance Act modifies the common law right of subrogation to permit an insurer to subrogate upon making a payment or assuming liability. If the amount recovered is insufficient to provide complete indemnity, the amount recovered is divided on a pro rata basis between the insurer and insured. State Farm’s right of subrogation was modified further by section 20 of the OPCF 44R, which permits subrogation upon the making of a claim under the OPCF 44R, but was silent on what happens when the recovery was insufficient for full indemnity.

The Court accepted the plaintiff’s argument that section 278 of the Insurance Act applied, and that pro rata sharing should occur until he was fully indemnified under the judgment, rather than only until he received full indemnification under the OPCF 44R. To order that State Farm fully indemnify the plaintiff under the OPCF 44R, and that pro rata sharing should occur until the plaintiff was fully indemnified under the OPCF 44R, would result in the pro rata sharing ending before it even began. The Court dismissed State Farm’s arguments that the pro rata sharing requirement found in section 278 of the Insurance Act only applied to property damage. There would have been no need to specifically include a general subrogation right in s. 278 if subrogation were restricted to the property damage circumstances already designated by the Automobile Insurance regulation.

This case was digested by Joe Antifaev, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Joe Antifaev at