It is an “Urban Myth” that sugar added to a fuel tank will irreparably damage an engine

Insurance law – Actions – Res judicata – Policies and insurance contracts – Interpretation of policy – Coverage – Subrogation – Restitution

Haromszeki v. McCulloch, [2013] O.J. No. 6437, Ontario Superior Court of Justice Small Claims Court, October 23, 2013, G. Barycky Deputy J.

The insurer brought a subrogated claim against a defendant who had damaged the insured’s motorcycle by pouring sugar into the gas tank. The defendant had pled guilty to a charge of mischief and had been ordered to pay restitution to the insured.

The court found the restitution order was not a bar to bringing a civil suit for the recovery of damages on the basis of res judicata. The court dismissed the defendant’s argument that the insured was not actually insured so as to permit an insurer to bring a subrogation claim. It dismissed this argument on the basis that it could infer the policy of insurance provided coverage because the insurer had made an indemnity payment. Most of the reasons focused on whether the causal link between sugar and the engine damage had been established. The court concluded it was “Urban Myth” that sugar added to a fuel tank will irreparably damage the engine. Accordingly, the defendant was only responsible for the cost of removing the sugar from the engine, but not for the total amount the insurer had indemnified for the damage to the engine.

This case was digested by Djuna M. Field of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact her directly at dfield@harpergrey.com or review her biography at http://www.harpergrey.com

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