In Hafeez v. Sunaric, a 2015 appeal decision of Perell
J, the issue of whether a contract can be enforced for property
damage against an at fault driver, given that we have a No- Fault
system in Ontario, is examined. In this case, the parties were
involved in a motor vehicle accident in a parking lot. The Small
Claims Court Judge dismissed the action:
The agreement was unenforceable for
want of consideration;
The agreement was barred by s. 263 of
the Insurance Act
Mr. Hafeez owned an insured BMW. Mr. Sunaric owned an insured
Mercedes. On November 22nd, 2009, there was a collision in the
parking lot between these two vehicles. Mr. Sunaric admitted fault
for the accident and afterwards, they signed the following
I, Radomi Sunaric R/O [address] [driver's licence] had
parked my car Mercedes ... at the parking lot of No Frills at Bloor
St. W. between Keele St. and Runnymede. As I wanted to go out of
the parking lot at about 6:10 p.m. on 22/11/2009 I was reversing my
car and struck a BMW ... which was duly parked in the central lane
of the parking lot. My car badly hit the BMW damaging front and
front left corner. It was absolutely my fault. There was no one in
the BMW. I accept all my fault and all the consequences I am
responsible for. I will pay him $15,000 minus insurance
Perell J found that the critical part of the note was the
sentence, "I will pay him $15,000.00 minus insurance
A few months later, Mr. Hafeez had an assessment of his vehicle
and the BMW was assessed at $13,500.00. Over a year later, after
having the Ombudsman involved of his insurer, Mr. Hafeez was paid
$6,500.00 by his insurer for the damage to his vehicle. Mr. Hafeez
did not appeal the decision because he had missed the 1 year
On November 18th, 2011, Mr. Hafeez issued a Statement of Claim
against Mr. Sunaric claiming the difference between the $6,500.00
and the $15,000.00 which was claimed to be the value of the BMW.
Mr. Sunaric was served and then noted in Default and a Default
Judgment assessment was scheduled before Justice Godfrey. Justice
Godfrey did not find the agreement enforceable because it did not
provide for any consideration, such as if Mr. Hafeez had agreed not
to submit a claim to his insurer, resulting in Mr. Sunaric not
reporting the matter to his insurer, and not having his insurance
There was also reliance on s. 263 of the Insurance Act
which deals with Direct Compensation for Property Damage in
accidents involving two or more insured automobiles. This section
basically holds that an insured's only right of action is their
In terms of whether there was a want of consideration regarding
the contract, Perell J found that that the consideration that Mr.
Sunaric received was that Mr. Hafeez limited his claim to
In terms of s. 263, it was found that the property loss
compensation introduced precluded tort claims, but that claims in
contract are not precluded. The exception for claims in contract is
found in s. 263(5)(a.1) which states:
(a.1) an insured has no right of action against a person under
an agreement, other than a contract of automobile insurance, in
respect of damages to the insured's automobile or its contents
or loss of use, except to the extent that the person is at fault or
negligent in respect of those damages or that loss;
There have been situations where s. 263(5)(a.1) has been applied
to situations where the defendant agrees by an oral contract to pay
for the damage to the Plaintiff's vehicle, without the parties
resorting to their insurance, as has been noted by Justice Juriansz
in Clarendon National Insurance v. Candow. Perell J. found
that there was no reason to interpret the exception for contracts
in a restricted way. Furthermore, in McClinton v. Estien,
a 2003 decision of the Ontario Small Claims Court, Deputy Judge
Kilian held that for the contract to be enforceable, it must meet 2
There must be an agreement for the
damage, content, and loss of use; and
The agreement must be between the
Plaintiff and the person at fault of negligent
Since these two conditions were met in this case, and for the
reasons set out above, Mr. Hafeez was awarded judgment in the
amount of $8,500.00.
So, if you are ever involved in a motor vehicle accident, be
careful about what you sign at the scene of the accident in terms
of admitting fault and agreeing to pay for property loss.
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