RBC Travel Insurance Co. v. Aviva Canada Ltd.

82 O.R. (3d) 490

Court of Appeal for Ontario,

Gillese, Lang and MacFarland JJ.A.

September 25, 2006

Insurance -- Automobile insurance -- Excess insurance -- Insured covered under standard Ontario automobile policy and also purchasing travel insurance -- Insured injured in motor vehicle accident in Michigan and requiring emergency services there -- By clear terms of travel insurance policy, that policy was excess insurance -- Section 268(6) of Insurance Act not applying -- Insured's automobile insurance policy providing primary coverage and responsible to pay insured's medical expenses -- Insurance Act, R.S.O. 1990, c. I.8, s. 268(6). [page491]

The insured was covered by two policies: a standard Ontario automobile policy issued by Aviva and a travel insurance policy issued by RBC. She was injured in a motor vehicle accident in Michigan and made an emergency claim against RBC for medical expenses. RBC paid the total claim and brought an action against Aviva for reimbursement. On a motion by RBC for judgment compelling Aviva to reimburse it and for a determination of a question of law, the motion judge found that both the RBC policy and the Aviva policy provided primary coverage. That being so, s. 268(6) of the Insurance Act applied. That section provides that an automobile policy is excess "to any other insurance not being automobile insurance of the same type". He concluded that RBC was solely responsible to pay the insured's medical expenses. RBC appealed.

Held, the appeal should be allowed.

The issue between the parties turned on the wording of their respective policies. To hold that the RBC policy did not provide excess coverage would be to ignore the plain language of the policy. The coverage clause stated: "This insurance only covers expenses in excess of those covered under your government health insurance plan and by any other insurance or benefit plan under which you are covered." General Condition 6 of the policy explicitly provided for excess coverage: "All benefits payable to you under any of our policies are in excess of the benefits . . . payable to you by any other insurer." Those clauses could not be ignored, and their plain meaning led to the conclusion that the travel policy provided excess coverage where other coverage existed for the same loss. Where a policy, by its own terms, does not provide first payor coverage, s. 268(6) of the Act has no application. Primary coverage existed under the Statutory Accident Benefits provisions of the automobile policy, and Aviva was required to reimburse RBC for the amount it paid out in respect of this claim.

William S. Chalmers, for appellant.

Joseph W.L. Griffiths, for respondent.

Cases referred to Baker v. Insurance Corp. of British Columbia, 1996 1560 (BC CA), [1996] B.C.J. No. 293, 17 B.C.L.R. (3d) 100 (C.A.), affg 1994 182 (BC SC), [1994] B.C.J. No. 853, 93 B.C.L.R. (2d) 112, [1994] ÂI.L.R. 1-3105 (S.C.); Neill and Gunter Inc. v. Simcoe & Erie General Insurance Co., 1986 5194 (NB CA), [1986] N.B.J. No. 17, 68 N.B.R. (2d) 89, 175 A.P.R. 89, [1986] I.L.R. Â1-2025 (C.A.), affg 1985 4416 (NB QB), [1985] N.B.J. No. 77, 60 N.B.R. (2d) 351, 157 A.P.R. 351, [1985] I.L.R. Â1-1875 (Q.B.); Trafalgar Insurance Co. of Canada v. Imperial Oil Ltd. (2001), 2001 21205 (ON CA), 57 O.R. (3d) 425, [2001] O.J. No. 4936, [2002] I.L.R. Â1-4064 (C.A.); Travel Insurance Co-Ordinators Ltd. v. ING Halifax Insurance Co., 2002 53277 (ON CA), [2002] O.J. No. 3566, 167 O.A.C. 201 (C.A.), affg (2001), 2001 28085 (ON SC), 57 O.R. (3d) 406, [2001] O.J. No. 4978, [2002] I.L.R. Â1-7382 (S.C.J.); Trenton Cold Storage Ltd. v. St. Paul Fire and Marine Insurance Co., 2001 20561 (ON CA), [2001] O.J. No. 1835, 199 D.L.R. (4th) 654, [2001] I.L.R. Â1-3990 (C.A.) Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, s. 268(6) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rules 20 [as am.], 21 [as am.] Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96, ss. 14, 60(2)

APPEAL from the judgment of Moore J. of the Superior Court of Justice dated March 3, 2006 dismissing a claim by the appellant insurer for reimbursement from the respondent insurer. [page492]

The judgment of the court was delivered by

[1] MACFARLAND J.A.: -- The issue raised on this appeal is which of two insurance policies provides primary coverage to a person injured in a motor vehicle accident that occurred in Traverse City, Michigan, U.S.A. Overview

[2] On July 11, 2003, Jennifer Currie was injured in a motor vehicle accident in the state of Michigan, U.S.A., and, as a result, she required emergency medical services there.

[3] At the time of the accident, Ms. Currie was insured under two policies: first, a standard Ontario automobile policy issued by Aviva Canada Ltd. ("Aviva") and second, a travel insurance policy issued by RBC Travel Insurance Company ("RBC").

[4] Ms. Currie contacted RBC and made an emergency claim for medical expenses. RBC paid the total claim in the sum of CDN$23,960.82 on behalf of Ms. Currie on October 2, 2003.

[5] RBC then brought the within proceeding for reimbursement by Aviva of the amount it paid on behalf of Ms. Currie.

[6] On March 3, 2006, RBC brought a motion under Rules 20 and 21 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] for judgment compelling Aviva to reimburse RBC in full for the amounts paid on behalf of Ms. Currie, and for a determination of a question of law.

[7] The motion proceeded before Moore J. who found that both the RBC policy and the Aviva policy provided primary coverage. That being so, in his view s. 268(6) of the Insurance Act, R.S.O. 1990, c. I.8 applied. That section provides that an automobile policy is excess "to any other insurance not being automobile insurance of the same type". He concluded that RBC was solely responsible to pay Ms. Currie's medical expenses.

[8] RBC appeals that decision, taking the position that its policy is excess and the Aviva policy is primary and that therefore Aviva is responsible to reimburse RBC for the amounts it paid on behalf of Ms. Currie together with interest and costs. I agree and, in the circumstances, conclude that s. 268(6) of the Insurance Act does not apply. [page493] General Principles

[9] I begin with the observation that in the usual case, the interpretation of a policy of insurance raises a question of law where the standard of review is correctness.

[10] Insurance policies, like other contracts, are to be interpreted based on the plain and ordinary meaning of the language used therein (absent, of course, any special or defined meanings set out in the contract). As this court said in Trafalgar Insurance Co. of Canada v. Imperial Oil Ltd. (2001), 2001 21205 (ON CA), 57 O.R. (3d) 425, [2001] O.J. No. 4936 (C.A.), at para. 23, "the plain meaning of the policy language should be respected. Ambiguities should not be judge-made; they should be apparent from a reasonable reading of the policy."

[11] The law presumes that the words used in a policy of insurance have meaning; if the meaning of the words is clear, it should be given effect. In Neill and Gunter Inc. v. Simcoe & Erie General Insurance Co., 1985 4416 (NB QB), [1985] N.B.J. No. 77, 60 N.B.R (2d) 351 (Q.B.), at para. 14, affd 1986 5194 (NB CA), [1986] N.B.J. No. 17, 68 N.B.R. (2d) 89 (C.A.), it was stated: "The court will if possible give effect to all parts of an instrument and an interpretation which gives a reasonable meaning to all its provisions is preferred to one which leaves a portion of the writing useless or inexplicable."

[12] It is of interest to note that before the motions judge Aviva took the following position:

[T]he RBC policy is not an excess but rather a primary policy and, as such, there is sufficient overlap between the coverages provided by the two policies that the two insurers need jointly share the claim. Furthermore it was agreed between the parties that if it were determined that both policies provided primary coverage, the Currie claim should be split equally between the two insurers.

[13] In this court, Aviva seeks to uphold the motion judge's finding that, although its policy provides primary coverage as did the RBC policy, contribution is governed by s. 268(6) of the Insurance Act and accordingly the RBC policy is primary and the Aviva policy excess.

[14] The issue between the parties turns on the wording of their respective policies. As this court noted in Trenton Cold Storage Ltd. v. St. Paul Fire and Marine Insurance Co., 2001 20561 (ON CA), [2001] O.J. No. 1835, 199 D.L.R. (4th) 654 (C.A.), at para. 9, "[i]n order to determine the nature and extent of the coverage, it is necessary to look at the obligation to pay under each policy and to consider any other applicable provisions in the context of each insurance agreement as a whole". [page494] The RBC Policy

[15] The RBC policy is entitled "Travel Insurance Policy". Under the "General Insurance Details" section of the policy it provides:

To be eligible for any insurance coverage you must: . . . . . (e) be covered under your government health insurance plan for the full duration of your trip (if you are purchasing a package or stand alone Emergency Medical Insurance coverage)

[16] Other relevant provisions of the policy are as follows:

What coverage limitations apply? 1. If you are covered under TravelCare -- Bronze Coverage, you will be responsible for a deductible of $500 for each claim. We will apply this deductible to any claim covered under this insurance in excess of your government health insurance plan coverage. 2. If you do not contact Assured Assistance Inc. at the time of your medical emergency or you choose to receive treatment from a medical service provider outside the network, you will be responsible for 30% of your medical expenses covered under this insurance and in excess of your medical expenses paid by your government health insurance plan . . . 3. This insurance is subject to a maximum of $20,000 if you do not have valid government health insurance plan coverage at the time of the claim. (Emphasis added)

[17] In addition to specifying that the travel insurance is excess to health insurance, the policy addresses benefits available to the insured under other insurance policies:

What risks are insured?

This insurance covers the reasonable and customary medical expenses you actually incur once you have left your departure point for necessary medical care or surgery, as part of the emergency treatment arising from a medical condition. This insurance only covers expenses in excess of those covered under your government health insurance plan and by any other insurance or benefit plan under which you are covered. (Emphasis added) And further:

What conditions apply:

By paying the premium for this insurance, you agree that we and Assured Assistance Inc. have: (a) Your consent to verify your healthcard number and other information required to process your claim, with the relevant government and other authorities; [page495] (b) Your authorization to physicians, hospitals and other medical providers to provide to us and Assured Assistance Inc. any and all information they have regarding you, while under observation or treatment, including your medical history, diagnoses and test results; and (c) Your agreement to the disclosure of the information available under a) and b) above to other sources, as may be required for the processing of your claim for benefits obtainable from other sources. (Emphasis added) And under the General Conditions section of the policy: 3. If you are eligible from any other insurer, for benefits similar to the benefits provided under this insurance, the total benefits paid to you by all insurers cannot exceed the actual expense that you have incurred. We will co-ordinate the payment of benefits with all insurers from whom you are eligible for benefits similar to those provided under this insurance, to a maximum of the largest amount specified by each insurer. . . . . . 6. All benefits payable to you under any of our policies are in excess of the benefits for the same or similar benefits payable to you by any other insurer. (Emphasis added)

[18] Finally, the Travel Insurance Claim and Authorization Form found at the back of the policy booklet and referenced in the language of the policy, refers in Section C thereof to "other insurance coverage". A claimant is asked: Do you have group benefits through

-- your employer

-- your spouse's employer

-- a retiree plan and Do you have benefits available through -- home insurance -- auto insurance -- other. The Aviva Policy

[19] The Aviva policy is a standard Ontario automobile policy known as O.A.P. 1. That policy provides Statutory Accident Benefits ("SAB") pursuant to the schedule set out in [page496] Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96, which applies to motor vehicle accidents that occur after November 1, 1996.

[20] Part V of the SAB schedule is entitled "Medical, Rehabilitation and Attendant Care Benefits". Under the first section, which deals with medical benefits, the schedule provides:

14(1) The insurer shall pay an insured person who sustains an impairment as a result of an accident a medical benefit.

(2) The medical benefit shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for, (a) medical, surgical, dental, optometric, hospital, nursing, ambulance, audiometric and speech-language pathology services; . . .

[21] Under the section of the schedule entitled "Other Collateral Benefits", s. 60(2) provides:

60(2) Payment of a medical, rehabilitation or attendant care benefit or a benefit under Part VI is not required for that portion of an expense for which payment is reasonably available to the insured person under any insurance plan or law or under any other plan or law. (Emphasis added) Analysis

[22] Section 268(6) of the Insurance Act provides:

Excess Insurance

268(6) The insurance mentioned in subsection (1) [statutory accident benefits coverage] is excess insurance to any other insurance not being automobile insurance of the same type indemnifying the injured person or in respect of a deceased person for the expenses.

[23] The language of the two policies is not easily reconciled. In Travel Insurance Co-Ordinators Ltd. v. ING Halifax Insurance Co. (2001), 2001 28085 (ON SC), 57 O.R. (3d) 406, [2001] O.J. No. 4978 (S.C.J.), affd 2002 53277 (ON CA), [2002] O.J. No. 3566, 167 O.A.C. 201 (C.A.), Lane J. considered whether a policy of travel insurance providing coverage for medical benefits or the SAB contained in a standard Ontario automobile policy of insurance provided primary coverage to parties who were injured by an explosion in a camper truck while vacationing in Minnesota in August 1999.

[24] In that case, the respondent automobile insurer submitted that the proper approach was to consider s. 268(6) of the Insurance Act as the governing enactment and that, no matter the language of the travel policy, this provision made the travel insurance primary cover and the SAB excess. In rejecting that submission Lane J. stated at para. 10: [page497]

I cannot read that subsection so widely. If it intended to override the terms of policies of insurance, the legislature would surely have done so explicitly. The subsection must, in my opinion, be read as making the SAB excess to any other insurance which is, by its own terms, bound to provide "first dollar coverage". Since the applicant's policy is, by its own terms, a second payor, s. 268(6) has no effect.

[25] At para. 16 he concluded:

In my view, the coverage under the applicant's policy is not reasonably available to the injured parties until the SAB benefits have been exhausted. The respondent is the primary carrier and is responsible for the amounts paid to and on behalf of the injured parties with respect to treatment and transportation expenses arising out of the accident of August 21, 1999.

[26] Condition 9 of the travel policy at issue in the Travel Insurance case, supra, at para. 5, explicitly stated that it provided second payor coverage:

The coverages outlined in this insurance are second payor plans. If there are other third party liability, group or individual basic or extended health insurance plans or contracts including any private or provincial or territorial auto insurance plan providing hospital, medical or therapeutic coverage, or any third party liability insurance in force concurrently herewith, amounts payable hereunder are limited to those expenses incurred outside the province or territory of residence that are in excess of the amounts for which an Insured person is insured under such other coverage.

[27] In my view, the language in the travel policy at issue in that case admitted of no other meaning. It specifically stated (a) that it was second payor insurance and (b) that where there were provincial or territorial auto insurance plans that provided hospital, medical or therapeutic coverage, amounts payable under the travel policy were limited to those expenses in excess of those available to the insured under those other coverages.

[28] The policy at issue in Baker v. Insurance Corp. of British Columbia, 1994 182 (BC SC), [1994] B.C.J. No. 853, 93 B.C.L.R. (2d) 112 (S.C.) was similarly clear. The insured in that case had been injured in an accident in the State of Washington. At the time he drove a motor vehicle that was owned by his father and covered by the Insurance Corporation of British Columbia owner's certificate of insurance issued to his father. In addition, the plaintiff insured's father had acquired on behalf of his son a policy of insurance issued by Lloyd's of London, which by its terms provided "Excess Hospital/Medical for Canadian Residents" coverage. The plaintiff was therefore an insured under both the ICBC policy and the Lloyd's policy. The lone issue in that case was whether the medical expenses incurred by the plaintiff in the State of Washington were recoverable solely from either Lloyd's or ICBC or from both of them. [page498]

[29] The Lloyd's policy, reproduced at para. 7 of the judgment, stated the relevant coverage to be:

COVERAGE

EXCESS HOSPITAL / MEDICAL FOR

CANADIAN RESIDENTS ONLY

[30] And further:

If Injury or Sickness of an Insured requires Emergency Hospital confinement or Emergency treatment by a legally qualified physician and surgeon during a period in which Insurance is in force hereunder the Insurer will reimburse the Insured for the actual, reasonable and necessary Hospital and medical expenses incurred, excluding interest charged, during such confinement and treatment and payable by an Insured less any amount payable under a provincial Health Care Plan, any other group health or private insurance plan, any other policy (or an extension to any policy) or credit card coverage and any amount legally recoverable from another party (this includes but is not limited to the amounts recoverable under any private or provincial auto insurance plan). [Emphasis added] And further:

Amounts payable under this section shall be for the excess of such expenses over any amount available or collectible for treatment or services which are insured services or basic health treatment services under the provincial medical care plan of the Province in which the Insured is resident, whether or not the Insured is covered thereunder, or those expenses payable or collectible under any other policy or plan. [Emphasis added]

[31] At para. 8 of its judgment, the court noted one of the general conditions of the policy as follows: 11. After the benefits payable by the government plans have been determined, the excess benefits shall be paid by the insurer unless other policies, plans or contracts of the insured are deemed primary insurance. Primary insurance shall be determined by the effective dates of the policies, plans or contracts. [Emphasis added] The court further noted, at para. 9, the following provision in that section of the policy setting out the claims procedure: 2. All coverage under this Document of Insurance is excess to any other insurance whether collectible or not. Claims are limited to the lesser of the excess of amounts payable under the Government Health Insurance Plan or other insurance plan or the sum insured. [Emphasis added]

[32] The court in that case had no difficulty in concluding, at para. 6, that "the terms of the Lloyd's policy make it plain that the [page499] Lloyd's coverage is 'excess' insurance, and in particular that the coverage for hospital and medical expenses is excess to the amount payable or recoverable under any 'provincial auto insurance plan'".

[33] The language in the RBC policy before the court is of a more general nature (in relation to auto coverage) than was the language in either Travel Insurance, supra, or Baker v. ICBC, supra.

[34] Nevertheless, the court's task is to give meaning to the language used.

[35] The motions judge concluded that the wording of the RBC policy did not support a finding that the RBC policy was an excess policy. In his reasons in reference to the Baker v. ICRC decision he concluded: "RBC makes no specific reference to a 'provincial auto insurance plan' and [as] that phrase is specifically referred to in para. 15 of the decision, clearly [it was] a significant factor in the court's determination that the Lloyd's policy was excess to the Provincial auto insurance plan".

[36] He then turned to the policy in issue and reasoned:

But for the use of the word "excess" in paragraph 3 on page 18 of the RBC policy and in General Condition 6 on page 41, included in a 22 word closing of one paragraph in the former and 29 words in the latter, I see no specific reference to an overall intention in the 46 pages of the RBC policy to alert the reader, clearly and in the first instance, the insured, that the premiums to be paid for the coverage afforded by the RBC policy are to buy an excess coverage applicable in circumstances of a case such as the one at bar.

I do not find the wording of General Condition 3 clearly supports the view that the RBC issued an excess coverage policy. At best, that condition is neutral to the determination.

On the whole of the policy, I do not find a clear intent expressed, not in the title of the contract nor in the text of the policy language, to justify the conclusion urged upon me by RBC. If the insurer had so intended, it would have been an easy task to so say, as apparently was the situation in the language of the policy interpreted by Justice Lane in the Travel Insurance case which he found provided second payor coverage by its terms.

[37] In other words, he concluded that the language of the RBC policy was not sufficient to make that policy a "second payor" or excess policy.

[38] I respectfully disagree with that conclusion. While the language of the RBC policy is perhaps not quite as "clear" as was the language in Travel Insurance, supra, it is nevertheless my view that, properly interpreted, the RBC policy provides excess coverage. To hold otherwise would be to ignore the plain language of the policy as set out in paras. 15 through 18 of these reasons as well as those in paras. 39 and 40 below. [page500]

[39] The coverage clause reads:

This insurance only covers expenses in excess of those covered under your government health insurance plan and by any other insurance or benefit plan under which you are covered. [Emphasis added]

[40] Further, General Condition 6 of the policy explicitly provides for excess coverage: 6. All benefits payable to you under any of our policies are in excess of the benefits payable to you by any other insurer. (Emphasis added)

[41] In my view, these clauses cannot be ignored and their plain meaning leads to the conclusion that the travel policy provides excess coverage where other coverage exists for the same loss. To hold otherwise is to ignore these provisions.

[42] Aviva argues that by reason of s. 268(6) of the Insurance Act, its policy is converted into an excess policy where any other insurance not being automobile insurance of the same type exists to cover the loss.

[43] However, as Lane J. pointed out in Travel Insurance, supra, at para. 10, in reference to s. 268(6): "The subsection must in my opinion be read as making the SAB excess to any other insurance which is, by its own terms, bound to provide 'first dollar coverage'".

[44] Where a policy, by its own terms, does not provide first payor coverage, s. 268(6) has no application.

[45] Accordingly, it follows that primary coverage exists under the SAB provisions of the automobile policy and Aviva therefore must reimburse RBC for the amount it paid out in respect of this claim.

[46] In the result, I would allow the appeal, set aside the decision of the motions judge and order that judgment issue in accordance with these reasons. Costs of the appeal to the appellant fixed in the sum of $4,500 inclusive of disbursements and GST. Costs of the motion below, to be agreed upon or assessed. Appeal allowed.