Wawanesa Mutual Insurance v. Motor Vehicle Accident Claims, 2010 ONSC 1949

Introduction

1Wawanesa applies for judicial review of the decision of the Director’s Delegate dated February 3, 2009, which denied an appeal of the order of an arbitrator dated June 20, 2007.

2The Director’s Delegate was determining whether the arbitrator erred in law in finding that the Motor Vehicle Accident Claims Fund (the “Fund”) was not an insurer within s.268(2) of the Insurance Act, R.S.O. 1990, c.I.8, and therefore not required to pay statutory accident benefits as the first insurer to receive a completed application for benefits. The arbitrator reached this decision because he found there was no nexus established between the claimant and the Fund.

Standard of Review

3The applicant submits that a correctness standard of review applies because the issue is a general question of law. This Court has applied a reasonableness standard of judicial review of the decisions of Director’s Delegates on a number of occasions subsequent to Dunsmuir v. New Brunswick, 2008 SCC 9 (for example, T.T.C. Insurance Company Ltd. v. Watson, 2008 49337 (ON SCDC), [2008] O.J. No. 3820 and Aviva Canada Inc. v. Murugappa, 2009 34045 (ON SCDC), [2009] O.J. No. 2770).

4In addition, the Director’s Delegate is protected by a full privative clause in s.20(1) of the Insurance Act. The nexus issue is within the Director’s Delegate’s expertise, and the nexus principle is not of central importance to the legal system. It is only relevant to disputes in the areas of entitlement to Ontario no-fault motor vehicle accident benefits and is squarely within the expertise of the Director’s Delegate. Moreover, the nexus issue before the Director’s Delegate and arbitrator raised a question of mixed fact and law. Therefore, the standard of review is reasonableness.

5Pursuant to s.2 of O. Reg. 283/95, the first insurer that receives a completed application for benefits is responsible for paying benefits to an insured person pending resolution of any dispute about priorities between insurers. Courts and arbitrators have developed a nexus test for triggering an insurer’s obligation under s.2. The threshold for establishing nexus is not a high one, but the claimant’s choice of insurer cannot be arbitrary (see Kingsway General Insurance Co. v. Ontario (Minister of Finance) (2007), 2007 ONCA 62, 84 O.R. (3d) 507 (C.A.) at paras. 20 and 21).

6The arbitrator concluded at page 10 of his reasons:

There is no evidence that he [the claimant] turned his mind to the question of whether the insurer to which he submitted his application might be required to pay him accident benefits. I find that the inescapable inference is that Mr. Valauskas’ choice to submit his application to the Fund was arbitrary. In these circumstances, the Fund is not an “insurer” within the meaning of section 268 and it is not required to respond to his application.

7The Director’s Delegate, on appeal, held at page 6 of his reasons:

It may be that the Priority Regulation seeks to balance the concern that insured persons do not get caught between warring insurers and the concern that they in turn not abuse the system. In any event, this was a case where the arbitrator found that the insured failed to take any steps to determine if there was another policy of insurance available. While the arbitrator recognized that the nexus threshold is low, I agree with him that it is difficult to see how it could be any lower than this case, which would mean there was effectively no threshold at all.

8In our view, this decision was reasonable. The decision does not impose any obligation on the claimant to perform an investigation. The claimant was required to provide a police report with his application, which was not an onerous obligation. Once the Fund obtained the police report, thereby making the application to the Fund complete, it was apparent that the Fund had no nexus to the accident. The claimant provided no evidence at that point or subsequently to show any rational basis for applying to the Fund for benefits.

Conclusion

9For these reasons, the application for judicial review is dismissed.

MCCOMBS J.

Costs

10The application is dismissed for oral reasons delivered by Swinton J. on behalf of the Court. Costs payable to Motor Vehicle Accident Claims Fund by the applicant, fixed at $3,500.00, payable forthwith.