Executive Summary: Key Legal and Evidentiary Issues

• Aviva denied coverage after Naipaul failed to comply with statutory conditions requiring cooperation with the insurer's investigation.
• Central to the dispute was whether Naipaul permitted a suspended driver, O'Neil Francis, to operate her vehicle, which would breach Section 4(1) of the Statutory Conditions.
• Naipaul's non-compliance included failure to provide cell phone records, police reports, and a Proof of Loss as formally requested by Aviva.
• Relief from forfeiture under Section 129 of the Insurance Act was considered but found inapplicable, as there was no compliance at all — not merely imperfect compliance.
• MVC's estoppel and waiver arguments were rejected; Aviva's negotiations to minimize storage costs did not constitute an implied waiver of its right to deny coverage.
• No privity of contract existed between MVC Towing and Storage Inc. and Aviva, leaving no reasonable cause of action against the insurer.

Facts of the case

On November 16, 2019, a vehicle owned by Deandra Naipaul and insured by Aviva Insurance Company of Canada was involved in an accident in which it rolled over multiple times. No driver was present at the scene when the Ontario Provincial Police (OPP) arrived. The OPP contacted MVC Towing and Storage Inc. ("MVC") to tow the vehicle to the OPP pound for investigation. Naipaul initially told Aviva that she and her boyfriend, O'Neil Francis, had attended a funeral, that she left her vehicle and keys with Francis, that Francis was assaulted, and that the vehicle was subsequently stolen before the accident occurred.

On December 10, 2019, Naipaul told Aviva she did not want the OPP inspecting the vehicle and disclosed that Francis had been missing for over two weeks. Aviva advised her that coverage was not assured and that investigations would follow. The OPP later informed Aviva that Francis had been caught driving with a suspended licence and issued a summons shortly before the accident, raising doubts about Naipaul's stolen-vehicle account. The OPP completed their investigation and released the vehicle to MVC on March 15, 2020. MVC stored the vehicle for a considerable period, during which a running dispute arose between MVC and Aviva over the appropriate storage rate. Aviva ultimately recovered the vehicle with the assistance of the Sheriff; it was a complete loss and sold at auction.

MVC commenced proceedings under Section 23 of the Repair and Storage Liens Act, and Aviva initiated proceedings under Section 24 of the same Act. MVC subsequently brought a claim against both Aviva and Naipaul. Aviva moved for a declaration that Naipaul had no entitlement to coverage under automobile insurance policy A21412079PLA and sought to have the claim against it struck.

Policy terms and statutory conditions at issue

The key statutory provision at issue was Section 4(1) of the Statutory Conditions, which states that an insured shall not permit any other person to drive or operate the automobile unless that person is authorized by law to do so. If Naipaul had knowingly allowed Francis — a suspended driver — to operate her vehicle, this provision would have been breached, precluding coverage. Aviva also relied on Section 5(3) of the Statutory Conditions, which requires the insured to cooperate with the insurer by aiding in securing information, evidence, and witnesses when requested.

The court also considered Section 129 of the Insurance Act, which provides relief from forfeiture where there has been imperfect compliance with a statutory condition regarding proof of loss or other required acts by the insured.

Court's reasoning and analysis

To resolve inconsistencies in Naipaul's account, Aviva formally requested her cell phone records, police reports, and a standard Proof of Loss. Naipaul provided none of these and did not appear at the motion. On September 3, 2020, Aviva formally denied coverage. On September 15, 2020, Naipaul responded only with, "I will try and get the car myself thanks." In a Defence filed on February 11, 2026 — more than five years after the claim was issued — Naipaul acknowledged that her claim was on a without-prejudice basis pending Aviva's investigation and access to the vehicle.

The court assessed whether relief from forfeiture applied under Section 129 of the Insurance Act, applying the three-part "Liscumb" test: whether the insured's conduct was reasonable, whether the breach was grave, and whether there was a disparity between the value of the property forfeited and the damage caused by the breach. The court found the test inapplicable because there was no compliance at all with Section 5(3) — not merely imperfect compliance — and the doctrine was therefore not engaged.

MVC's most compelling argument was that Aviva's continued involvement in negotiating and disputing storage payments constituted an estoppel or implied waiver of its right to deny coverage. The court rejected this, reasoning that an insurer acting to minimize liability is protecting its own interests where coverage exists and the insured's interests where it does not. Treating such conduct as a waiver would discourage insurers from taking steps to minimize claims, ultimately harming insureds whose coverage is legitimately denied. The court also affirmed, citing Remax Auto Inc. v Gore Mutual Insurance and Singh, 2017 CanLII 59231 (ON SCSM), that there is no privity of contract between an insurer and a third-party service provider such as MVC.

Ruling and overall outcome

The court found no coverage, no privity of contract, and no reasonable cause of action against Aviva. Pursuant to Rules 12.02(1)(a) and 12.02(2)(1) of the Small Claims Court Rules, the claim against Aviva was struck and the action against it dismissed. Aviva was the successful party on the motion. On the question of costs, the court noted that the standard Rule 15.07 cap of $100.00 was inappropriate given the special circumstances — the matter had been ongoing for over five years, both parties prepared extensive factums, and the motion was day-long in substance. The court calculated that a 15% representation fee on the plaintiff's claimed amount of $28,786.75 would yield $4,318.01 plus disbursements, but Aviva's Rule 14 Offer, which was better than the outcome for MVC, entitled Aviva to seek approximately double costs, or roughly $9,000.00. Balancing the philosophy of the Small Claims Court against the merit of Aviva's Rule 14 Offer, the court ordered MVC to pay Aviva costs fixed at $6,000.00.