The Ontario Court of Appeal held that the plaintiffs were not “legally entitled to recover from the owner or driver of an uninsured automobile” because the motor vehicle accident occurred in Quebec, which had a no-fault system

Soriano (Litigation Guardian of) v. Palacios, [2005] O.J. No. 2217, Ontario Court of Appeal

The plaintiffs were insured under an automobile policy issued in Ontario. At the time of the accident, the plaintiffs were residents of Ontario. One member of the plaintiffs’ family was injured by a car owned and operated by the defendant Palacios in Quebec. The plaintiffs commenced an action in Ontario against both the defendant driver and the plaintiffs’ insurer.

The Insurance Act of Ontario requires every policy to provide uninsured motorist coverage. The Quebec legislation provides for a “no fault” system of compensation for those involved in automobile accidents. Under the Quebec legislation, no action can be brought to recover damages from an at-fault driver for bodily injuries caused by an automobile accident in Quebec. Rather, the accident victim receives compensation from a fund regardless of who is at fault.

The plaintiffs’ insurer was successful in a summary judgment application for dismissal of the action for uninsured benefits. The Court of Appeal dismissed the plaintiffs’ appeal.

The Court of Appeal held that an insured cannot recover under a policy for uninsured automobile coverage unless he or she is “legally entitled to recover from the owner or driver of an uninsured automobile”. The law governing the tort action determines whether the plaintiffs are “legally entitled” to recover damages from the defendant Palacios. The Court of Appeal followed the Supreme Court of Canada decision in Tolofson v. Jensen, [1994] 3 S.C.R. 1022, and held that the substantive law to be applied was the law of Quebec. The Court held that it did not have discretion to apply the law of Ontario. The Court of Appeal expressed its view that the Ontario Superior Court decision in Lau v. Li (2001), 53 O.R. (3d) 727, which found that there was discretion not to apply the lex loci delicti in an inter-provincial tort action, was wrongly decided.

The Court of Appeal held that the Quebec legislation completely eliminated the plaintiffs’ legal entitlement to recover damages from the defendant Palacios, whether or not she was at fault. As such, the plaintiffs were unable to meet the requirement for accessing the mandatory uninsured driver coverage under their Ontario automobile insurance policy.

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