2017 ONSC 5235

DIVISIONAL COURT FILE NO.: 17-DC-2277

DATE: 2017/09/06

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

IN THE MATTER OF the Insurance Act, R.S.O. 1990, c. I.8, s. 275, and R.R.O. 1990, Reg. 664

AND IN THE MATTER OF the Arbitration Act, 1991, S.O. 1991, c. 17

AND IN THE MATTER OF an Arbitration

BETWEEN:

PRIMMUM INSURANCE COMPANY

Applicant/Respondent

– and –

L’UNIQUE ASSURANCES GÉNÉRALES INC.

Respondent/Appellant

Marie-Pier Couturier, for the Applicant/Respondent

Brian C. Elkin, for the Respondent/Appellant

HEARD: May 19, 2017

REASONS FOR DECISION

APPEAL by L’Unique Assurances Générales Inc. from the arbitrator’s decision dismissing L’Unique’s motion with respect to documentary disclosure prior to, and substantive issues to be addressed at, the hearing of an indemnity dispute between the two insurers.

CORTHORN J.

Overview

[1] Kyle Broomer was 17 years old and living with his father Douglas Broomer and his stepmother Emma Lavigne in November 2011. On November 20, 2011, Kyle crossed Carling Avenue and was struck by a car insured by L’Unique Assurances Générales.

[2] As of November 2011, Doug owned a motorcycle that he insured with Primmum. No cars were listed on the policy that insured the motorcycle (“Doug’s policy”). Also as of November 2011, Emma owned two cars, both of which were insured with Primmum (“Emma’s policy”). Doug was a listed driver on Emma’s policy. No motorcycles were insured under Emma’s policy.

[3] The parties acknowledge that at the time of the accident, Kyle was dependant on his father and on his stepmother. As a dependant of both his father and stepmother, Kyle was entitled to claim accident benefits under either Doug’s policy or Emma’s policy.

[4] Kyle has, since the accident, been receiving Statutory Accident Benefits (“SABs”) from Primmum. The SABs Kyle has received and continues to receive are paid to him by Primmum under Doug’s policy.

[5] As the insurer of the car by which Kyle was struck, L’Unique received an application from Primmum for indemnification of the SABs paid to Kyle. The application was made pursuant to section 275 of the Insurance Act, R.S.O. 1990, c. I.8. The application led to an indemnity dispute between L’Unique and Primmum. The two insurers selected an arbitrator to conduct a hearing and to determine the outcome of the indemnity dispute.

[6] L’Unique brought a pre-hearing motion before the arbitrator for an order:

a) Declaring that how Kyle’s claim for accident benefits came to be adjusted, in particular under Doug’s policy as opposed to under Emma’s policy, forms part of the indemnity dispute and is therefore to be considered by the arbitrator at the hearing;

b) Requiring Primmum to produce various documents with respect to:

i) Issuing policies that insure only motorcycles; and

ii) Treatment of claims for SABs when there exists more than one policy pursuant to which an insured may make such a claim; and

c) Requiring Primmum to produce any and all relevant claims, documents, internal records, notes, memoranda, or communication with the insured.

[7] The insurers agreed that the arbitrator’s decision on the pre-hearing motion would not be treated as an interlocutory ruling; it would be subject to appeal to a judge of the Ontario Superior Court of Justice, sitting as a single judge of the Divisional Court.

[8] The arbitrator dismissed L’Unique’s motion. L’Unique appeals the dismissal of its motion on the grounds that the arbitrator made (a) findings of fact or of mixed fact and law that are patently unreasonable, and (b) errors of law. Primmum argues that the arbitrator’s decision is well-reasoned, does not contain unreasonable findings of fact or of mixed fact and law, and does not contain errors of law.

[9] The parties are in agreement that the standard of review to be applied on this appeal is that of “reasonableness.”

Framework for Indemnity Claims and Disputes

[10] An insurer paying SABs is entitled, in certain circumstances, to indemnification from another insurer for benefits paid. Subsection 275(1) of the Insurance Act provides:

The insurer responsible under subsection 268 (2) for the payment of statutory accident benefits to such classes of persons as may be named in the regulations is entitled, subject to such terms, conditions, provisions, exclusions and limits as may be prescribed, to indemnification in relation to such benefits paid by it from the insurers of such class or classes of automobiles as may be named in the regulations involved in the incident from which the responsibility to pay the statutory accident benefits arose.

[11] The wording of subsection 275(1) of the Act makes it clear that entitlement to indemnification is not absolute; it is “subject to such terms, conditions, provisions, exclusions and limits as may be prescribed”. Some of the terms and conditions, etc. are set out in the balance of section 275. For example, the fault determination rules apply to indemnification and there is no entitlement to indemnification for the first $2,000 of SABs paid (subsections 275(2) and (3), respectively).

[12] Other terms and conditions, etc. are prescribed by a regulation pursuant to the Act (“Automobile Insurance”, R.R.O. 1990, Reg. 664 (“the Regulation”)). Section 9 of the Regulation provides definitions for some of the terms that appear in section 275 of the Act. In addition, section 9 sets out the criteria for entitlement to indemnification. Only when those criteria are met is an insurer paying SABs entitled to indemnification from another insurer.

[13] In subsection 9(1) of the Regulation, a “first party insurer” is defined as “the insurer responsible under subsection 268(2) of the Act for the payment of statutory accident benefits”. The insurer required to indemnify a first party insurer pursuant to section 275 for SABs paid is defined by subsection 9(1) of the Regulation as the “second party insurer”.

[14] The circumstances in which a first party insurer is entitled to indemnification from a second party insurer for SABs paid are set out in subsections 9(2)(a) and (b) of the Regulation. For the purpose of the indemnity dispute between Primmum and L’Unique, only subsection 9(2)(a) is relevant. It provides:

A second party insurer under a policy insuring any class of automobile other than motorcycles, off-road vehicles and motorized snow vehicles is obligated under section 275 of the Act to indemnify a first party insurer,

(a) if the person receiving statutory accident benefits from the first party insurer is claiming them under a policy insuring a motorcycle and,

(i) if the motorcycle was involved in the incident out of which the responsibility to pay statutory accident benefits arises, or

(ii) if motorcycles and motorized snow vehicles are the only types of vehicle insured under the policy.

[15] Primmum asserts that it is a first party insurer entitled to indemnification because Kyle “is claiming” SABs under a policy insuring a motorcycle (Doug’s policy) and Doug’s motorcycle is the only vehicle insured under the policy.

[16] As highlighted by L’Unique both to the arbitrator and on appeal, if the SABs were being paid to Kyle under Emma’s policy, Primmum would not meet the definition of a “first party insurer” within the meaning of subsection 9(1) . In that circumstance, Primmum would not be entitled pursuant to section 275 of the Act to indemnification from a second party insurer for the SABs paid to Kyle.

[17] Central to L’Unique’s position is its argument that Primmum must establish that Kyle (the person “receiving” SABs from Primmum) “is claiming” entitlement to those benefits pursuant to Doug’s policy (s.9(2)(a) of the Regulation). L’Unique submits that it is not sufficient for Primmum to rely on the OCF-1 form signed by Doug on behalf of Kyle as evidence of Kyle’s choice of insurer from whom to claim SABs.

[18] L’Unique submits that the manner in which the OCF-1 was prepared by Primmum, before it was sent to Doug for completion on Kyle’s behalf, and the manner in which Doug completed the form:

a) Did not necessarily result in evidence supportive of a finding that Kyle “is claiming” SABs from Primmum under Doug’s policy; and

b) Are properly the subject of both documentary disclosure obligations prior to and inquiry at the hearing of the indemnity dispute.

[19] Primmum’s position is that L’Unique, as the potential second party insurer, is not entitled to go behind the choice of insurer from whom Kyle “is claiming” SABs as evidenced by the contents of the OCF-1.

The Arbitrator’s Decision

[20] The arbitrator dismissed L’Unique’s motion for the following reasons:

1. Section 268 of the Insurance Act provides the regulatory scheme for priority disputes. Section 275 of the Act provides the “same scheme” but for indemnity disputes (para. 27);

2. To include as part of the indemnity dispute an inquiry as to how or why Kyle exercised his discretion when choosing the policy under which he would claim SABs runs counter to the clarity and certainty intended by the Insurance Act and related regulations. Timeliness and efficiency in the resolution of indemnity disputes would be lost if such an inquiry were permitted (paras. 28, 31, 32, and 35);

3. The OCF-1 signed by Doug is evidence of Kyle’s choice to claim SABs pursuant to Doug’s policy (para. 26);

4. There is no authority to suggest that an insured could not be influenced or swayed by anyone or anything when exercising discretion in the selection of an insurer from which to claim SABs (para. 34); and

5. There is nothing to prevent an insurer from writing a policy of insurance that covers a motorcycle only (para. 33).

[21] The arbitrator did not include paragraph numbers in his original decision. The paragraph numbers are from the copy of the arbitrator’s decision included with L’Unique’s factum on the appeal, to which paragraph numbers were added for ease of reference.

Standard of Review

[22] The parties agree that the standard of review is reasonableness. It is helpful to understand why reasonableness, and not correctness, is the applicable standard of review.

[23] In its decision in Intact Insurance v. Allstate Insurance, the Ontario Court of Appeal addressed the standard of review on an appeal from a decision of an arbitrator in an “insurance arbitration” (2016 ONCA 609, 131 O.R. (3d) 625, leave to appeal to S.C.C. refused, 37206 (February 9, 2017)):

• An arbitrator conducting an arbitration pursuant to the provisions of the Insurance Act is a non-judicial decision-maker (para. 25);

• Decisions of non-judicial decision-makers are subject to review in the context of the administrative law framework associated with Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 (paras. 24 and 25);

• The issue the arbitrator was asked to decide did not involve a question of jurisdiction, a constitutional question, or a general question of law of central importance to the legal system as a whole and outside the arbitrator’s expertise (paras. 45 and 52); and

• Insurance arbitrators are recognized as having experience and expertise in interpreting insurance laws (para. 47).

[24] I find that nothing about the substance of this appeal causes it to fall into the category of an exceptional question of the kind described in the third bullet point above.

[25] The appeal in Intact Insurance v. Allstate Insurance involved a priority dispute as to which the insurer was required to pay the injured persons the SABs to which they were entitled. The Court of Appeal concluded that even if the appeal involved “an extricable question of law regarding SABS”, the standard of review of reasonableness would still generally apply (para. 53).

[26] Therefore, even if it can be said that the appeal before me involves an extricable question of law related to indemnity disputes, the standard of review of reasonableness applies in general.

[27] In paragraph 47 of its decision in Dunsmuir, the Supreme Court of Canada established guidelines for the application of the standard of review of reasonableness. The guidelines include that reasonableness is a deferential standard. The qualities that make a decision reasonable must be considered. Of primary concern is the existence of justification, transparency, and intelligibility in the decision-making process. The secondary concern is whether the arbitrator’s decision “falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law” (ibid).

[28] L’Unique’s position on the appeal is based largely on the primary concern. L’Unique is critical of the reasons articulated by the arbitrator. Not surprisingly, Primmum focuses on the secondary concern. Primmum submits that the arbitrator’s decision falls within the range of possible, acceptable outcomes (even if some criticism of the arbitrator’s reasons is warranted).

Disposition

[29] I find that the arbitrator’s decision was unreasonable for the following reasons:

1. He did not differentiate between the statutory and regulatory provisions related to priority disputes and those related to indemnity disputes;

2. He decided an issue that was not before him (Kyle’s choice of insurers from whom to claim SABs). In doing so, he relied on a document (the OCF-1 signed by Kyle’s father) that was not filed as evidence specifically on that issue; and

3. He did not consider the evidentiary requirements of the statutory and regulatory scheme with respect to applications for SABs, the resolution of priority disputes, and the resolution of indemnity disputes.

[30] As a result, I grant L’Unique’s appeal as it relates to the relief sought in paragraphs 6(a), (b)(ii), and (c) above.

[31] L’Unique has not established that the arbitrator’s decision with respect to the ability of Primmum (or any insurer) to write a policy of insurance that covers a motorcycle only was in any way unreasonable. As a result, I dismiss L’Unique’s appeal as it relates to the relief sought in paragraph 6(b)(i) above.

Analysis

[32] Disputes arising between insurers pursuant to section 275 of the Act and the Regulation are frequently referred to as loss transfer disputes. This reference has developed despite the fact that the statutory section and the related section in the Regulation both have the word “Indemnification” in their respective titles.

[33] In these Reasons I refer to the dispute between Primmum and L’Unique as an “indemnity dispute”. I also refer generally to disputes pursuant to section 275 of the Act and the Regulation as “indemnity disputes”.

[34] The arbitrator whose decision is under appeal referred to the dispute between Primmum and L’Unique as a “loss transfer” dispute. Other decision-makers whose decisions are quoted in the balance of these Reasons also refer to this type of dispute as a “loss transfer” dispute. Whether the term indemnity dispute or loss transfer dispute is used, they are, for the purpose of these Reasons, one and the same.

1) Differentiating Between Priority Disputes and Indemnity Disputes

[35] At paragraph 27 of his decision, the arbitrator said, “Section 268 provides the regulatory scheme for priority disputes and [s]ection 275 provides the same scheme but for loss transfer disputes.” That statement overlooks the significant differences between the regulatory schemes for the two types of disputes.

[36] From a broad perspective, the two schemes are intended to serve different purposes. The priority dispute scheme (section 268 of the Act and O. Reg. 283/95 in combination) serves to ensure that an injured person entitled to SABs receives those benefits even if there is a dispute as to which insurer is required to pay benefits. Under the priority dispute scheme, SABs are paid to the injured person pending the resolution of a dispute, if any, as to which insurer should be paying benefits. The interests of the injured person are significant in the priority dispute scheme.

[37] The interests of the injured person do not feature significantly, if at all, in indemnity disputes. The Ontario Court of Appeal described the purpose intended to be served by section 275 of the Act and by the Regulation as follows: “The loss transfer scheme was introduced as part of the no-fault SAB regime to achieve an appropriate balance between the insurers of various classes of vehicles in meeting the cost of providing SABs to injured motorists” (Markel Insurance v. ING Insurance, 2012 ONCA 218, 109 O.R. (3d) 652, at para. 6).

[38] There are also specific differences in how the two schemes operate. For example, an injured person receiving benefits is entitled to notice of and to participate in the hearing of a priority dispute (O. Reg. 283/95, ss. 4 and 5). There is no provision in either section 275 of the Act or the Regulation entitling an injured person receiving benefits to notice of or to participate in an indemnity dispute. As another example, in the context of a priority dispute an injured person claiming benefits is required to submit to an examination under oath, if requested to do so by the insurer to whom the application for SABs is submitted (O. Reg. 283/95, s. 6(2)). An injured person receiving benefits is not subject to an examination under oath as part of an indemnity dispute.

[39] There are differences between the obligations of insurers involved in a priority dispute and those of insurers involved in an indemnity dispute. In a priority dispute, an insurer who receives an application for SABs, and who wishes to dispute its obligation to pay benefits, is required to give written notice to every insurer whom it claims is required to pay benefits pursuant to section 268 of the Act. The written notice must be given within 90 days of receipt of a completed application (O. Reg. 283/95, s. 3(1)). There is no notice requirement in the context of an indemnity dispute (Intact Insurance v. Lombard General Insurance, 2015 ONCA 764, 128 O.R. (3d) 658, at para. 4, leave to appeal to S.C.C. refused, 36804 (May 5, 2016)); see also TD General Insurance v. Markel Insurance, Dec. 13, 2013 (Arbitrator: Lee Samis) at p. 2, aff’d on other grounds, 2014 ONSC 6461, 123 O.R. (3d) 383).

[40] I find that as opposed to distinguishing between the priority dispute scheme and indemnity dispute scheme, the arbitrator conflated them. The conflation of the two schemes was unreasonable. The conflation resulted in the arbitrator overlooking or failing to appreciate the evidentiary burden on a first party insurer seeking indemnification pursuant to section 275 of the Act. That evidentiary burden is addressed in the balance of these Reasons.

[41] I note that the Arbitration Agreement executed by the parties, and which forms part of the appeal record, refers in the first lines of the title of proceeding to O. Reg. 283/95 (the priority dispute regulation). L’Unique’s notice of motion and all documents filed on the motion and on this appeal refer to the same regulation number. That reference is, however, incorrect. The indemnity dispute is governed by O. Reg. 664. I refer to that regulation number in the title of proceeding in these Reasons.

2) Decision on an Issue Not Before Him

[42] At paragraph 26 of his decision, the arbitrator reached the following conclusion with respect to Kyle’s choice of insurers from which to claim SABs:

Accordingly, Kyle Broomer, was entitled, in his discretion, to decide the insurer from which he would claim benefits. The application for accident benefits included at Tab L of Primmum’s brief is evidence of his choice. That is an OCF-1 application for accident benefits pursuant to his father’s policy of insurance that insured a motorcycle, signed by his father, Douglas Broomer.

[43] I agree with L’Unique that the issue of whether the OCF-1 included in Primmum’s brief is evidence of Kyle’s choice of insurer to whom to apply for SABs was not before the arbitrator. The arbitrator’s decision in that regard goes beyond the issues he was requested to determine and was therefore unreasonable.

[44] If I am incorrect, and it was open to the arbitrator to decide whether the OCF-1 is “evidence” of Kyle’s choice of insurer, for the reasons that follow, I find that the arbitrator’s conclusion on that issue was unreasonable.

[45] The OCF-1 was not before the arbitrator as part of the record on the motion. The OCF-1 was included as an attachment to the factum delivered on behalf of Primmum. Prior to the return of the motion, the parties agreed that (a) the arbitrator was permitted to consider the contents of the OCF-1, and (b) the policy number that appeared on page 1 of the OCF-1 was typed/completed by Primmum before it sent the form to Doug for completion on Kyle’s behalf.

[46] I agree with L’Unique that in the absence of additional evidence, the OCF-1 is not evidence of Kyle’s choice to claim SABs pursuant to Doug’s policy. One need only look at Part 4 of the OCF-1 to question what choice, if any, Kyle (or Doug on his behalf) made with respect to the insurer from which he would claim SABs.

[47] In Part 4, the person completing the form is required to identify whether the injured person is covered for SABs under a policy of “automobile insurance” and, if so, to identify the policy or policies under which he or she is covered. The person completing the form is given the following directions: “In order to determine which automobile insurer is responsible for paying benefits, it is necessary to know whether you have your own policy or whether you are covered by someone else’s insurance policy. To help make that determination, please complete the following”.

[48] First, in Part 4A, the individual is asked if they are covered under any one of six categories of automobile policies. The categories include the person’s own policy, their spouse’s policy, and “the policy of any person on whom you are dependant (e.g. a parent)”. Boxes for “Yes” and “No” are placed beside each category of insurance, with the intention that the person completing the form will check the appropriate box beside each of the six categories of insurance.

[49] In the OCF-1 completed by Doug on Kyle’s behalf, none of the boxes in Part 4A of the form are checked. In particular, the “Yes” box is not checked beside the category of “the policy of any person upon whom you are dependant”. Instead, a box in Part 4B is checked.

[50] The direction given for Part 4B is that if “No” is checked for all six categories in Part 4A, “you must send your application to the insurer of … the vehicle that struck you if you were a pedestrian or cyclist”. In the OCF-1 completed on Kyle’s behalf, the only box checked is in Part 4B—the box for “The vehicle that struck me as a pedestrian/cyclist”. Based on that box being checked and the direction given in the form, it would have been expected that Doug would, on Kyle’s behalf, send the completed OCF-1 to L’Unique as the insurer of the car by which Kyle was struck. Doug returned the signed OCF-1 to Primmum.

[51] Primmum sent the OCF-1 to Doug with the following pre-printed information at the top of the first page of the document:

• Primmum Insurance Company (with its full address) as the insurer to whom to return the form;

• A claim number typed in the appropriate box;

• The policy number for Doug’s policy typed in the appropriate box; and

• The date of the accident typed in the appropriate box.

[52] The finding by the arbitrator that the OCF-1 is evidence of Kyle’s choice of insurer from whom to claim accident benefits (a) is not supported by the contents of the document as completed by Doug on Kyle’s behalf, and (b) was unreasonable.

3) Evidentiary Requirements in Priority Disputes and Indemnity Disputes

[53] There are two aspects to the arbitrator’s failure to fully consider the evidentiary requirements.

[54] First, the arbitrator failed to appreciate that in priority disputes evidence is frequently introduced and considered with respect to the completion of an OCF-1 form and the claimant’s choice of insurer. At paragraph 32 of his decision, the arbitrator said:

In my view, it would introduce an air of uncertainty into the application process where insurers would be allowed to question and “look behind” the provisions they should be entitled to rely upon. Further, it would inject an air of unpredictability and therefore inefficiency into the process with, no doubt, further protracted inquiries, production of documents and examinations, the very thing that prior decisions state this insurance scheme was designed to avoid. Clarity, certainty, predictability and efficiency would be gone.

[55] Arbitral and judicial decisions made in the context of priority disputes make it clear that it is open to the decision-maker to consider evidence that (a) the insured person claiming accident benefits was aware there was a choice available as to insurers from whom to claim SABs, and (b) with that knowledge made a conscious choice (Lumbermens Mutual Casualty v. Lombard Canada, Feb. 2, 1998 (Arbitrator: S. Malach); Security National v. Markel (2009), 2009 CarswellOnt 17097 (Arbitrator: Lee Samis) at para. 68, rev’d on other grounds, 2010 ONSC 5309, 89 C.C.L.I. (4th) 257; and Jevco Insurance v. Pilot Insurance, 2003 5265 (ON SC), [2003] O.T.C. 474, at paras. 6-7).

[56] Where there are two insurers of equal rank between whom the insured person has a choice when claiming SABs, it is important that the insured person make an informed choice. For example, optional benefits may be available under one policy and not the other. In that circumstance, the insured person is entitled to exercise his or her discretion, with full information in hand, based on a conscious decision.

[57] In determining the issue of Kyle’s choice of insurer, it is important for the arbitrator to know what information was provided by Primmum to Kyle about (a) the potential choice of insurers generally, (b) the potential choice between claiming SABs under Doug’s policy versus under Emma’s policy, and (c) the level of SABs available to Kyle under each policy. This list is not intended to be exhaustive. It is incumbent upon the parties, with the assistance of the arbitrator if necessary, to determine the scope of the documentary disclosure obligations.

[58] Second, the arbitrator failed to fully consider the requirement for evidence of the claimant’s exercise of discretion when choosing the insurer to whom he or she applies for SABs. At paragraph 34 of his decision, the arbitrator said:

Similarly, there was no authority cited to suggest that an insured could not be influenced or swayed by anyone or anything in exercising his or her discretion. The fact of the matter is that an application for benefits pursuant to the motorcycle policy of insurance was completed and benefits were paid pursuant to it.

[59] That statement overlooks the emphasis placed by the Act on the exercise of discretion by the injured person in deciding the insurer from which he or she will claim benefits:

• An insured person who is claiming benefits is (a) an occupant or a non-occupant of a vehicle, and (b) has recourse against more than one insurer for the payment of SABs, “the person, in his or her absolute discretion, may decide the insurer from which he or she will claim the benefits” (section 268(4) of the Act); and

• For a spouse or a dependant of a named insured (i.e. Doug and/or Emma), the Act provides that such an individual, “in his or her discretion, may decide the insurer from which he or she will claim the benefits” (sections 268(5) and (5.1).

[60] Subsections (4), (5), (5.1) and (5.2) of section 268 identify that there may be more than one insurer potentially responsible under section 268 for payment of SABs. As a result, the reference in section 275 of the Act to “the insurer responsible under subsection 268(2)” may be argued to refer to more than one insurer (TD General Insurance v. Markel Insurance, supra, para. 39 of these reasons, at p. 16).

[61] In TD General Insurance v. Markel Insurance, Arbitrator Samis discussed the relationship between section 275 of the Act, indemnity disputes, and evidence as to priority of insurers responsible to pay SABs. At page 17 of his decision, Arbitrator Samis concluded that:

a) The insurer claiming entitlement to indemnification must satisfy the criteria set out in the Regulation;

b) Indemnification cannot be addressed unless the highest ranking insurer (i.e. the insurer responsible to pay SABs) is known; and

c) “Loss transfer is a right that should only accrue to the highest ranking insurer, after all of the priority rules are applied to the facts”.

[62] In summary, there is nothing to prohibit the arbitrator who is deciding the indemnity dispute between Primmum and L’Unique from considering evidence with respect to the issue of the highest ranking insurer under section 268 of the Act. To the contrary, in the circumstances of the matter before him, the arbitrator is required to address that issue.

[63] By way of general comment, the arbitrator’s reluctance to open the inquiry to include consideration of whether Kyle “is claiming” SABs from Primmum pursuant to Doug’s policy was based in part on the well-known passage from the decision of Sharpe J.A. in Kingsway General Insurance v. West Wawanosh Insurance, 2002 14202 (ON CA), 58 O.R. (3d) 251.

[64] At paragraph 10 of the decision, describing the priority dispute scheme, Sharpe J.A. said:

The scheme applies to a specific type of dispute involving a limited number of parties who find themselves regularly involved in disputes with each other. In this context, it seems to me that clarity and certainty of application are of primary concern. Insurers need to make appropriate decisions with respect to conducting investigations, establishing reserves and maintaining records. Given this regulatory setting, there is little room for creative interpretations or for carving out judicial exceptions designed to deal with the equities of particular cases.

[65] In Kingsway, the Court was concerned with a limitation period issue. It was required to determine whether the first insurer (of two insurers) to whom the injured person submitted an application for SABs was entitled to proceed with arbitration of a priority dispute. The first insurer had failed to comply with the 90-day notice period.

[66] In that context it is understandable that “clarity and certainty of application are of primary concern”(ibid). It would, however, give too much emphasis to the phrase, “clarity and certainty of application”, if insurers involved in either a priority dispute or an indemnity dispute are not entitled to look behind a completed OCF-1 to determine the highest ranking insurer or to address the issue of choice of insurer.

Writing Policies for Motorcycles Only

[67] At paragraph 33 of his decision the arbitrator addressed L’Unique’s request to inquire into the basis upon which Primmum issued policies of insurance, such as the one issued to Doug, that covered a motorcycle only:

There is no indication in either the Act or the Regulations that I was referred to which would suggest than an insurer is not entitled to write an insurance policy covering a motorcycle and no other motor vehicle. Given the provisions of the loss transfer scheme, it would appear to be a prudent course for an insurer to follow, absent any prohibition against such a policy.

[68] In support of its position on the appeal from this aspect of the arbitrator’s decision, L’Unique offered only a very general proposition. It submitted that the only way to determine how the claim for SABs came to be adjusted under Doug’s policy is to require Primmum to produce the documents and evidence sought on L’Unique’s motion. I agree with that general proposition as it relates to documentary disclosure prior to and inquiry at the hearing with respect to Kyle’s choice of policy pursuant to which to claim SABs.

[69] I find, however, that the basis for Primmum’s decision to write a policy of insurance covering only a motorcycle is not relevant to the determination of the indemnity dispute. I agree with the arbitrator that L’Unique has not identified any statutory or regulatory provision in support of its inquiry into how or why Primmum chose to write a policy of insurance that covers only a motorcycle.

[70] For those reasons, L’Unique’s appeal from that aspect of the arbitrator’s decision is dismissed.

Summary

[71] I order as follows:

1. It is declared that how Kyle Broomer’s claim for accident benefits came to be adjusted, in particular under Doug Broomer’s policy as opposed to under Emma Lavigne’s policy, forms part of the indemnity dispute and shall be considered by the arbitrator at the hearing.

2. Primmum Insurance Company shall produce documents with respect to its treatment of claims for SABs when more than one policy, issued by Primmum Insurance Company, exists pursuant to which an insured may make such a claim.

3. Primmum Insurance Company shall produce any and all relevant claims, documents, internal records, notes, memoranda, or communication with Doug Broomer and/or Kyle Broomer with respect to the issue of choice of policy pursuant to which to claim SABs.

4. The balance of the appeal by L’Unique Assurances Générales Inc. is dismissed.

[72] In using “R.R.O. 1990, Reg. 664” in the title of proceeding in these reasons, I have exercised my inherent jurisdiction over the process to amend the title of proceeding. The parties may wish to consider whether to amend the title of proceeding in the indemnity dispute so that the correct regulation number is included in the title.

Costs

[73] In the event the parties are unable to agree upon costs of the appeal, they may make written submissions as follows:

a) The submissions shall be limited to a maximum of four pages, exclusive of a bill of costs;

b) Written submissions shall comply with Rule 4 of the Rules of Civil Procedure;

c) Hard copies of any case law or other authorities shall be provided with the submissions and shall comply with Rule 4 of the Rules of Civil Procedure with respect to font size;

d) The submissions, the documents referred to therein, case law, and other authorities, shall be on single-sided pages;

e) Written submissions shall be delivered by 5:00 p.m. on the twentieth business day following the date on which this Ruling is released; and

f) In the event any party wishes to deliver a reply to the costs submissions of the opposing party, the reply submissions shall be delivered by 5:00 p.m. on the twenty-fifth business day following the date on which this Ruling is released. Reply submissions shall comply with paragraphs (a) to (d) above.

Madam Justice S. Corthorn

Released: September 6, 2017

2017 ONSC 5235

DIVISIONAL COURT FILE NO.: 17-DC-2277

DATE: 2017/09/06

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

IN THE MATTER OF the Insurance Act, R.S.O. 1990, c. I.8, s. 275 and R.R.O. 1990, Reg. 664

AND IN THE MATTER OF the

Arbitration Act, 1991, S.O. 1991, c.17

AND IN THE MATTER OF an Arbitration

BETWEEN:

PRIMMUM INSURANCE COMPANY

Applicant/Respondent

– and –

L’UNIQUE ASSURANCES GÉNÉRALES INC.

Respondent/Appellant

REASONS FOR DECISION

Madam Justice Sylvia Corthorn

Released: September 6, 2017