Executive Summary: Key Legal and Evidentiary Issues

• A motor vehicle accident gave rise to a negligence claim in which the plaintiff was a passenger in a vehicle operated by defendant Hassan.
• Definity Insurance Company moved to be added as a statutory third party after denying coverage to Hassan under the applicable Ontario Owner's Policy.
• The insurer's stated grounds for denying coverage — misrepresentation, non-disclosure, and omission by the named insured — were found to be vague, non-specific, and supported only by inadmissible hearsay in the affidavit filed.
• Section 258(14) of the Insurance Act mandates that an insurer who denies liability under an automobile policy be added as a statutory third party, which the court accepted.
• At issue was whether the court should order, at the motions stage, that the indemnity (coverage) claim be decided separately from and after the negligence trial.
• Premature separation of the indemnity and negligence claims was declined, as the pleadings remained open and such an order could prejudge issues and interfere with the trial judge's procedural discretion.

Facts of the case

The plaintiff, Jason Ogolla Otieno, was a passenger in a Honda vehicle operated by defendant Ahmed Osama Ahmed Hassan at the time of a single motor vehicle accident. The vehicle was insured under an Ontario Owner's Policy of Insurance issued by Definity Insurance Company, with Ana Rita Moffatt — a non-party to the litigation — named as the insured. Alondra Moffatt, a defendant in the action, is Ana Rita Moffatt's daughter. The other defendants are Ahmed Osama Ahmed Hassan and Belair Insurance Company Inc.

Coverage denial and the statutory third party motion

Definity moved to be added as a statutory third party to the proceeding. According to the affidavit of Donna L. Kelly, a law clerk, Definity denied coverage to Hassan on the basis that the policy was "invalid" due to alleged misrepresentations, non-disclosures, and omissions by Moffatt in her application for insurance. Definity also disputed that Hassan qualified as an insured person under the policy, asserting he was neither a named insured, a listed driver, nor a person who had the consent of the named insured or vehicle owner to possess the vehicle. Associate Justice Nitchke noted that the affidavit did not identify the source of these statements, rendering them inadmissible hearsay, and characterized the stated reasons for denial as vague and non-specific.

Applicable policy terms and legislative framework

The policy at issue is an Ontario Owner's Policy of Insurance. The central legislative provision engaged is section 258(14) of the Insurance Act, which requires a court to add an insurer as a "statutory third party" once that insurer has denied liability under an automobile policy. The insurer's motion also sought an order directing that the coverage question be determined separately from and after the negligence trial, as well as an order precluding the jury from hearing evidence that Definity was a third party, subject to the trial judge's direction.

Reasoning and analysis

The court accepted that Definity had denied coverage to Hassan, satisfying the threshold requirement under section 258(14) of the Insurance Act, and granted the order adding Definity as a statutory third party. However, Associate Justice Nitchke declined to grant the additional relief sought. Relying on Deonanan v Kwan, 2021 ONSC 266, the court held that it was premature at the motions and pleadings stage to direct that the indemnity claim be heard separately from the negligence claim. As Chown J. reasoned in Deonanan, making such an order before the pleadings closed would risk giving one party an unfair advantage and would amount to prejudging a potential issue in the lawsuit.

Counsel for Definity, Ms. Patel, argued that Chown J. erred and that the three authorities he cited in support of an unsettled state of the law could be distinguished. Associate Justice Nitchke agreed with Ms. Patel's distinguishing analysis: McInnis v Personal Insurance, 2009 CanLII 59676, concerned production of an adjuster's notes rather than the sequencing of indemnity and negligence claims; Lica v Dhaliwal, 2015 ONSC 3888, addressed discoverability of coverage facts only to the extent relevant to OPCF 44R excess coverage; and Prentzas v Rivera, 2015 ONSC 5867, similarly involved document production for OPCF 44R purposes and did not decide whether the two claims could be tried concurrently. Nonetheless, the court held itself bound by Deonanan and agreed with its core reasoning — particularly paragraphs 7 through 10 — that a motions judge should not effectively advise the trial judge on case management while pleadings remain open. The court also noted that Hassan could still commence third party proceedings against Definity seeking coverage, in which case the coverage and negligence issues might or might not be tried together at the trial judge's discretion, as recognized in Kapileshwar v Sivarajah, 2008 CanLII 58154. On the jury issue, the court similarly declined to rule, observing that the insurer itself conceded the trial judge retained ultimate authority over what the jury would hear.

Ruling and overall outcome

Associate Justice Nitchke granted paragraphs 1, 2, and 5 of the draft order, adding Definity as a statutory third party to the proceeding. The motion was denied for the remaining paragraphs — specifically, the court declined to order that the indemnity claim be determined after trial and declined to make any preliminary ruling restricting what the jury may hear regarding Definity's involvement. The decision was released on June 2, 2026. Definity was partially successful in that it achieved third party status, but was unsuccessful in obtaining the broader procedural relief it sought. No monetary award, damages, or costs amount is specified in the decision.