Ontario’s Court of Appeal has laid down the law on trial lawyers habitually serving defendants’ auto liability insurers as a matter of course when they can’t find the defendants to serve notice of the lawsuit. Don’t do it.
“As a habit, lawyers seek substituted service on the defendant’s motor vehicle liability insurer, automatically, when service cannot be effected at the address listed for the defendant on the police report. This is incorrect,” Ontario Superior Court Justice Jamie K. Trimble wrote for the court in a decision released last week.
“In these reasons, I wish to clarify when and how an automobile liability insurer should be involved in an order for substituted service on a defendant driver or owner of an automobile involved in an accident, or an order dispensing with service.”
The issue came to the fore after an auto accident in July 2020. The lawyer for the plaintiff in the auto liability case could not find the defendant. The plaintiff’s lawyer unsuccessfully tried to serve the defendant at the address listed on the motor vehicle accident report.
The plaintiff’s lawyer then asked the insurer if it could assist by obtaining the cooperation of the insured. The insurer tried to contact the insured defendant by telephone but was unsuccessful.
“There is no indication in the [court documents] whether the insurer confirmed that the address that it had for the insured defendant was current and accurate,” the court found. “There is no indication that the defendant’s automobile insurer agreed to accept service on behalf of its insured.”
And so, the plaintiff’s counsel sought an order from the court to substitute service of the statement of claim on the defendant driver by serving his auto liability insurer instead. The court denied the motion, essentially finding the lawyer didn’t try hard enough to find the defendant.
“Looking at the motor vehicle accident report and asking the named defendant’s insurer if it has an address for the insured, does not constitute reasonable efforts to find the person to be served,” Justice Trimble wrote. “Indeed, it is in abrogation of that responsibility.
“The plaintiff must do more. She could have searched social media sites or done a Canada 411 search. She could have retained a skip tracer for a modest amount of money. None of this was done.”
Justice Trimble then spelled out the proper procedure for lawyers to follow if they planned to substitute service of the statement of claim to the defendant’s insurer instead of the defendant.
“Substituted service of an insured person by service on his or her insurer is an anomaly,” Trimble wrote. “It should not be allowed, as a rule, as it places the onus of finding the insured on the insurer.
“If a defendant cannot be found and there is no way to bring home to him or her knowledge of the proceedings, service should not be effected by sending a copy of the statement of claim to his or her insurer, it should be dispensed with.”
That said, if a defendant truly cannot be found, and a lawyer seeks to serve the defendant’s insurer with a statement of claim against their insured, Justice Trimble laid the ground rules for allowing the practice at all.
“A court may only make an order that substituted service be effected on the defendant’s insurer where: a) the insurer agrees to accept service on behalf of its insured, b) there is evidence that the insurer has a current address for its insured and that by serving the insurer the insurer and is likely to become aware of the claim against him or her, or c) the plaintiff undertakes not to strike out the defence if the insurer cannot produce its insured person at examinations for discovery.”
In addition, the court noted, the service of the defendant’s insurer should only be done in conjunction with an attempt to show it tried to provide service to the last known address of the insured.
“If the court decides to name the automobile liability insurer in an order for substituted service, based on the foregoing, the order must provide that service be made on the insured person, by mail or delivery to the last known address of the named defendant, or at the address on file with the Ministry of Transportation,” Justice Trimble wrote.
“The order for substituted service should specify that once service is affected on the insured as directed, the plaintiff must provide to the defendant’s automobile liability insurer a copy of the documents that were served, the order permitting substitute service, and the affidavit of service under the terms of the order permitting substituted service. Proceeding this way will put the liability insurer on notice of the claim.”
Feature photo courtesy of iStock.com/syahrir maulana