Court File and Parties
DIVISIONAL COURT FILE NO.: 525/20
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Dambrot, Lederer and Favreau JJ.
BETWEEN:
JACOB JOHNSON
Applicant (Respondent in Appeal)
– and –
JEVCO
Respondent (Appellant in Appeal)
Tracy L. Brooks, for the Applicant
Joseph A. Cescon, for the Respondent
HEARD: May 20, 2021
Reasons for Judgment
Lederer, J.
Background
1On July 5, 2016 Jacob Johnson bought a motorcycle. The day before he had contacted his insurance broker requesting a quote to insure a Harley Davidson. The day after the purchase Jacob Johnson was advised that Jevco Insurance Company (“Jevco”), the insurer of the motor vehicle he already owned (a Chevrolet Silverado), did not underwrite motorcycle insurance and, moreover that given his poor driving record he would have to seek insurance through the insurer of last resort, the Facility Association. Jacob Johnson did not, during this or a subsequent discussion which took place five days later (July 11, 2016), advise the broker that he had already purchased a motorcycle. Jevco was not told of the purchase until August 2, 2016. On July 16, 2016, while operating the Harley Davidson motorcycle, Jacob Johnson was involved in an accident. He was seriously injured.
2Jacob Johnson sought accident benefits from Jevco. Some benefits, not all, were denied1 on the basis that Jacob Johnson was operating the motorcycle without insurance contrary to section 31 of the Statutory Accident Benefits Schedule.2 An application was made to the Licence Appeal Tribunal pursuant to section 280 of the Insurance Act.3 There was a preliminary issue to be determined by the Tribunal:
Is the applicant precluded from receiving the benefits in dispute? Did the applicant have insurance coverage for the accident?
3As noted by the Vice Chair who heard and decided the issue: “The consequences for [Jacob] Johnson of a finding that he was not insured [were] dire. He would lose the right to several benefits, most notably an income replacement benefit or a non-earner benefit.”4
4On Aril 1, 2020 the Licence Appeal Tribunal released its decision. It found that Jacob Johnson was covered by the policy held by Jevco. Jacob Johnson was not precluded from receiving the benefits in dispute.5 Jevco invoked its rights under the procedural rules applicable to the Licence Appeal Tribunal and requested a reconsideration of the decision that had been made.6
5It was considered in writing by the same Vice Chair. In a decision released on October 7, 2020 he denied the request.7
6This is a statutory appeal. It is authorized by the Licence Appeal Tribunal Act and is limited to “a question of law only”.8 The appeal is from the Reconsideration Decision but asks that both it and the “underlying order of April 1, 2020 be set aside.”9
The Statutory and Policy Framework
7The appeal concerns the meaning and interpretation of the insurance contract (policy) entered into by the parties to this appeal. In Ontario, the owners and lessees of motor vehicles are required, by law not to operate or to permit a motor vehicle to be operated unless it is insured.10 Insurance is a regulated industry. The Insurance Act contains provisions directed to “Insurance Contracts in Ontario”11and specifically to “Automobile Insurance”.12 Under the Insurance Act the “Chief Executive Officer” (formerly the Superintendent of Financial Services) is authorized “to approve the form of standard policies containing insuring agreements…for use by insurers in general.”13 The “Ontario Automobile Policy (OAP 1) Owner’s Policy” is a standard form that was approved by the Superintendent. When the Ontario Automobile Policy is combined with a completed and signed Application for Automobile Insurance and a Certificate of Automobile Insurance, a contract of insurance is created between the customer and the insurer.14 This is the form of policy which applied to the Chevrolet Silverado owned by Jacob Johnson at the time he purchased the Harley Davidson motorcycle. Section 2 of the Ontario Automobile Policy answers the question: What Automobiles are covered? Primary coverage is provided to any “Described Automobile.”:
A described automobile is any automobile or trailer specifically shown on your Certificate of Automobile Insurance.
8Under Ontario Automobile Policy, insurance may be extended to other automobiles:
If a premium is shown on the Certificate of Automobile Insurance for a specific coverage for a described automobile, then this coverage may be available in the event of a loss for other types of automobiles under this policy.
9The policy contains a chart to be used as a guide to the types of coverage that that can be extended to other automobiles.
10Among the other types of automobiles are “newly acquired automobiles”. They are described in the Ontario Automobile Policy as:
2.2.1 Newly Acquired Automobiles A newly acquired automobile is an automobile or trailer that you acquire as owner and that is not covered under any other policy. It can be either a replacement or an additional automobile. The replacement automobile will have the same coverage as the described automobile it replaces. We will cover an additional automobile as long as:
we insure all automobiles you own, and
any claim you make for the additional automobile is made against a coverage we provide for all your other automobiles.
Your newly acquired automobile(s) will be insured as long as you inform us within 14 days from the time of delivery and pay any additional premium required.
We may inspect the newly acquired vehicle and its equipment at any reasonable time.
Special Condition: Coverage is not extended to a newly acquired automobile if you are in the business of selling automobiles.
11The issue at the root of this appeal is the meaning of this section, which is in a standard form contract. Is the motorcycle that was purchased by Jacob Johnson a “newly acquired automobile” such that the insurance policy acquired in respect of the Chevrolet Silverado covered the motorcycle at the time of the accident and provided Jacob Johnson with the benefits that were denied? The resolution of this issue requires an interpretation of section 2.2.1. Pursuant to the Supreme Court of Canada’s decision in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co.,15 the interpretation of a standard form contract is a question of law which is an exception to the general principle that contract interpretation raises issues of mixed fact and law.
Is a Motorcycle an "Automobile"?
12Was the Harley Davidson motorcycle purchased by Jacob Johnson a “newly acquired automobile” as those words are used in the Ontario Automobile Policy (OAP 1) Owner’s Policy? The policy ostensibly defined the word “Automobile” but not in a way that, in the particular circumstances of this case, is helpful:
S. 1.3 Definitions
Automobile
In this policy, motorized snow vehicle is included in the definition of automobile. Regulations may include, or exclude, certain other types or classes of vehicles as automobiles.
In this policy, there is a difference between a described automobile and the automobile. When we refer to an automobile as described, we mean any automobile specifically shown on the Certificate of Automobile Insurance.
When we refer to automobile, we mean:
a described automobile,
a newly acquired automobile,
a temporary substitute automobile,
other automobiles driven by you, or driven by your spouse who lives with you, or
trailers, in certain circumstances16
13Obviously, this does not help understand what is included as an “automobile”, newly acquired or otherwise. The authority for the development of the Ontario Automobile Policy is the Insurance Act. It defines automobile:
224 (1) In this Part,
“automobile” includes,
(a) a motor vehicle required under any Act to be insured under a motor vehicle liability policy, and
(b) a vehicle prescribed by regulation to be an automobile.17
[Emphasis added]
14This raises the question: What is a “motor vehicle”. Does it include a motorcycle? If a motorcycle is a “motor vehicle” and it is required by legislation to be insured then it follows that pursuant to s. 224 of the Insurance Act it is also an “automobile”. The Highway Traffic Act18 defines “motor vehicle” as:
motor vehicle” includes an automobile, a motorcycle, a motor assisted bicycle unless otherwise indicated in this Act, and any other vehicle propelled or driven otherwise than by muscular power, but does not include a street car or other motor vehicle running only upon rails, a power-assisted bicycle, a motorized snow vehicle, a traction engine, a farm tractor, a self-propelled implement of husbandry or a road-building machine19
[Emphasis added]
15Given that “automobiles” are separately referred to within the definition of “motor vehicles”, it is clear that for the purposes of the Highway Traffic Act not all motor vehicles are “automobiles”. This does not detract from the understanding that for the purposes of the Insurance Act all motor vehicles including “motorcycles” are considered to be, and are dealt with as, “automobiles” if they are required (as a motor vehicle) to be insured under a “motor vehicle liability policy”. The Compulsory Automobile Insurance Act20 says they are to be insured:
2 (1) Subject to the regulations, no owner or lessee of a motor vehicle shall,
(a) operate the motor vehicle; or
(b) cause or permit the motor vehicle to be operated,
on a highway unless the motor vehicle is insured under a contract of automobile insurance.21
16This Act indicates that motor vehicle has the same meaning for its purposes as in the Highway Traffic Act:
“motor vehicle” has the same meaning as in the Highway Traffic Act and includes trailers and accessories and equipment of a motor vehicle;22
17Thus, a motor vehicle which, pursuant to the Highway Traffic Act includes a motorcycle is, for the purposes of the Insurance Act, an automobile because under the Compulsory Automobile Insurance Act it is required to be insured. On this basis a motorcycle is recognized as an automobile when that term is used in the Ontario Automobile Policy (OAP 1) Owner’s Policy. This being so, when the Ontario Automobile Policy s, 2.2.1 refers to a “newly acquired automobile” it includes a newly acquired motorcycle. As found in the Decision of the Licence Appeal Tribunal and confirmed in the Reconsideration Decision this means that Jacob Johnson was insured on the day of the accident and, given the agreement of the parties qualifies for the benefits that were denied.
The 14-Day Grace Period and Notice Requirement
18The response of Jevco is to ask the question: How can it be found to insure this motorcycle when, as a matter of company policy, it never insures such vehicles? The Factum filed on behalf of Jevco refers to this as “the single most important fact” distinguishing this case.23 To my mind, this is wrong. It is not a factor at all. There is a simple answer. The insurance contract, the one the parties entered into, the substance of which is the Ontario Automobile Policy (OAP1) Owner’s Policy, requires that this coverage be provided. To put it another way, Jevco cannot, in the face of its contractual obligations imposed by provincial policy, or otherwise agreed to by Jevco, avoid those obligations by relying on an internal company policy to the contrary. This is not, as Jevco would have it, “a redrafting of the OAP”.24 Rather it is an understanding of the plain and ordinary meaning of the words of s. 2.2.1 of the Ontario Automobile Policy.
19The company responds with another question: How can this be when, on July 5, 2016, before he purchased the motorcycle, and in conversations thereafter, Jacob Johnson was told by his insurance broker that Jevco did not insure motorcycles? For the company this question is underscored by noting that, in any event, Jacob Johnson did not advise Jevco of the purchase until August 2, 2016, well after the date of the accident (July 16, 2016) and after the 14 day period by which notice of such a purchase is, pursuant to section 2.2.1 of the Ontario Automobile Policy required. Moreover, no additional premium had been paid to insure the motorcycle. (I repeat what is said in s. 2.2.1: “Your newly acquired automobile(s) will be insured as long as you inform us within 14 days from the time of delivery and pay any additional premium required.”) The question misunderstands the import of the 14 day notice period. It is a grace period for continuing insurance to be arranged; it is not a precondition to insurance being provided for the 14 days. The expectation of an additional premium being required is for the continued insurance, once arranged, not for insurance over the grace period. The premium to cover the 14 days is assumed to have been included in the premium already paid since it covers insurance the contract already provides for. The absence of notice within 14 days means that, once the 14 day period had expired, Jevco no longer insured the newly acquired motorcycle.
20A similar circumstance was considered in Hunter Estate (Re).25 Properly understood the decision there confirms the one being made here. The insured owned two trucks. One was “parked”; that is not used and not insured. That truck has no bearing on this case. The second truck was insured under the same form of policy being considered here. It included section 2.2.1 (Newly Acquired Automobile). The insured purchased a third truck, did not notify the insurer within the 14 day period and within that time frame was involved in an accident. The insurer denied coverage saying that the three “preconditions” to coverage were not satisfied:
Kingsway argues that no coverage exists since the conditions of s. 2.2.1 of the Standard Ontario Automobile Policy were not fulfilled. First, there was no notification of the acquisition of the additional vehicle at any time, let alone within the 14 days. Second, the "parked" vehicle was not insured by Kingsway and third, the defendant Kozowy never paid the additional premium.26
21The matter was first dealt with on a motion brought under Rule 22 of the Rules of Civil Procedure requesting a determination of a question of law on an Agreed Statement of Facts.27 The decision dealt with each of the three objections. For reasons that will become apparent, I deal with them in a different order than the one referred to by the motion judge:
- The first objection was the absence of notice. The motion judge found that the existing insurance continued for the 14 day grace period. The judge quoted from a decision of the Supreme Court of Canada:
In my opinion, General Security was wrong in its contention that there was no insurance. Since fourteen days are allowed for notification of a change of car, this implies that the insurance continues during those fourteen days. Thus it is a "lapse" that occurs at the end of this time, by virtue of the condition.
The motion judge concluded:
In summary, no prejudice exists to the insurer during the 14-day period, since the premium on the existing vehicle would reflect the risk involved during that 14-day period when the coverage is "automatic".28
- The third objection, as dealt with by the motion judge, was the absence of any additional premium on the understanding that this requirement was to deal with insurance beyond the 14 day period:
In view of my previous findings, the additional premium would only apply to coverage on the new vehicle from day 15 onward. It has no application here, as the accident involving the GMC truck happened within the 14-day period.29
- The second objection taken up by the motion judge was the presence of the “parked vehicle” not being insured by the same company. The motion judge had insufficient evidence to determine whether or not the second vehicle was drivable but determined that the policy rationale behind the requirement that all owned vehicles be insured by the same company was to avoid a battle between insurers as to which was responsible for insuring any additional vehicle. Since there was only one insurer this problem did not arise:
It should be noted that the requirement of having all of the insured's vehicles covered by the same insurer is to prevent any misunderstanding as to which insurer ought to respond should it become necessary. Having only one insurer avoids any such argument and ensuing litigation.30
22The motion judge concluded the third truck was covered by the existing insurance policy.31 The decision was appealed and overturned on the basis that the motion judge erred when he found that “parked” truck did not offend the objection that all vehicles had to be insured by the same insurer.32 By the time the case came before the Court of Appeal the factual confusion concerning the operating status of the “parked” truck had been clarified:
Kingsway General Insurance did not insure all of the automobiles owned by Ms. Kozowy as she also owned a 1991 Ford 1/2-ton pick-up truck that was NOT insured by Kingsway General Insurance Company.
The said 1991 Ford 1/2-ton pick-up truck was in operable condition and was not insured by any insurance company as of September 1, 1996.
…33
23The Court of Appeal concluded the plain meaning of s. 2.2.1 of the Ontario Automobile Policy “requires that the owner insure with the [same] insurer all of the automobiles he owns. If the insured owns automobiles that he insures with another insurer or that he leaves uninsured, the precondition is not met. There is nothing in the language of s. 2.2.1 to confine it to circumstances whether there [was] another insurer. Because the 1991 Ford was operable it [was] an “automobile” owned by the insured.”34 In the case being decided, there is no third vehicle. The only other vehicle owned by Jacob Johnson was the Chevrolet Silverado. It was insured by Jevco.
24The setting aside of the decision of the motion judge for the reason stated does nothing to disturb the determination that the notice period is a grace period by which insurance is extended to “a newly acquired automobile”. To the contrary the Court of Appeal made the following observation:
We would not give effect to the argument that, if the precondition is met, the automobile is not automatically insured for 14 days under the policy. Again, on the plain wording of s. 2.2.1, it is automatically insured for 14 days.35
25This being so, it follows that there is no requirement to pay an additional premium to activate what is an automatic coverage for a “newly acquired automobile” albeit coverage that extends for only 14 days.
26Nonetheless, Jevco seeks to distinguish Hunter Estates (Re) from the present case. This was considered by the Licence Appeal Tribunal both in its initial decision36 and in its reconsideration37 and is repeated here.38 There is no merit to distinctions proposed being that the cases upon which its conclusions are based are distinguishable because they assume:
that an insurer had collected premium for bearing a risk in relation to a replacement vehicle and not an additional vehicle
that a replacement or additional vehicle would otherwise be a vehicle entitled to coverage and in none of the cases was there a coverage issue, and
that the risk to the insurer is determined more by reference to a driver or drivers than the actual vehicle itself.
The findings made by the Licence Appeal Tribunal arise from the plain and clear reading of s. 2.2.1 of the Ontario Automobile Policy (OAP 1) Owner’s Policy. There is no ambiguity or uncertainty and no reason to set aside the initial decision of the Licence Appeal Tribunal.
The Reconsideration Decision
27I turn to the Reconsideration Decision. I begin by observing that in undertaking a reconsideration the Licence Appeal Tribunal is afforded greater latitude than this Court is when it considers an appeal. As has already been reviewed the Court is limited to determining whether there has been “an error of law alone” in any initial decision being considered or any reconsideration if there has been one. The breadth of a reconsideration conducted by the Licence Appeal Tribunal is outlined in the applicable rules:
18.2 CRITERIA FOR GRANTING RECONSIDERATION
The Tribunal shall not make an order under 18.4(b) unless satisfied that one or more of the following criteria are met:
(a) The Tribunal acted outside its jurisdiction or violated the rules of natural justice or procedural fairness;
(b) The Tribunal made an error of law or fact such that the Tribunal would likely have reached a different result had the error not been made;
(c) The Tribunal heard false or misleading evidence from a party or witness, which was discovered only after the hearing and likely affected the result; or
(d) There is evidence that was not before the Tribunal when rendering its decision, could not have been obtained previously by the party now seeking to introduce it, and would likely have affected the result.39
28The consideration of the Court on an appeal of a reconsideration decision remains limited to questions of law. This is not surprising. The considerations on an appeal from the initial decision should be the same. Otherwise, there would always be a benefit in waiting for the broader review of a reconsideration, assuming such was allowed for. In the circumstances the substance of the decisions, that is the initial decision and the reconsideration, is the same and alleged errors not different.
29Finally, I note the appeal from the Decision and Reconsideration Decision was not premature because, pursuant to the agreement between the parties, the resolution of the issue of whether the motorcycle was a “newly acquired automobile” would, and presumably did, resolve all issues between them.
Conclusion
30For these reasons the appeal is dismissed.
Costs
31Pursuant to the agreement of the parties, costs to Jacob Johnson in the amount of $7,500.
Lederer, J.
I agree _______________________________
Dambrot, J.
I agree _______________________________
Favreau, J.
Released: July 28, 2021
CITATION: Johnson v. Jevco, 2021 ONSC 4870
DIVISIONAL COURT FILE NO.: 525/20
DATE: 20210728
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Dambrot, Lederer and Favreau JJ.
BETWEEN:
JACOB JOHNSON
Applicant (Respondent in Appeal)
– and –
JEVCO
Respondent (Appellant in Appeal)
REASONS FOR JUDGMENT
Released: July 28, 2021
31 (1) The insurer is not required to pay an income replacement benefit, a non-earner benefit or a benefit under section 21, 22 or 23, (a) in respect of a person who was the driver of an automobile at the time of the accident, (i) if the driver knew or ought reasonably to have known that he or she was operating the automobile while it was not insured under a motor vehicle liability policy,… [Emphasis added]
280 (1) This section applies with respect to the resolution of disputes in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled. (2) The insured person or the insurer may apply to the Licence Appeal Tribunal to resolve a dispute described in subsection (1)
The Tribunal may, on its own initiative or upon request of a party, if the request is made within 21 days of the date of the decision, reconsider any decision of the Tribunal that finally disposes of an appeal….
Subject to subsections (2) to (6), a party to a proceeding before the Tribunal relating to a matter under any of the following Acts may appeal from its decision or order to the Divisional Court in accordance with the rules of court: Insurance Act and s.11(6): An appeal from a decision of the Tribunal relating to a matter under the Insurance Act may be made on a question of law only.
In considering these two different and opposing points of view, I am of the opinion that there are a few general observations which seem pertinent. The first is that there must have been something tangible intended by the insertion in the standard automobile policy of the 14-day notice clause. In my view, this clause is a pragmatic recognition of a business fact that many purchasers of new vehicles would not immediately think of notifying their insurers of the existence of a replacement vehicle and is an obvious intent to give them some leeway in the matter without losing coverage. To deny automatic coverage on the replacement vehicle negates this concept completely.
A second observation is that the insurer has collected a premium for bearing the risk of protecting the insured during the full term of the policy. To deny coverage for anything less than the full term would be to confer an advantage, not contemplated, upon the insurer.
Footnotes
- The listed benefits in dispute were an income replacement benefit, visitor expenses and a housekeeping and home maintenance benefit (see: Jacob Johnson v. Jevco Insurance Decision and Order of the Licence Appeal Tribunal released April 1, 2020 at para. 5) (Caselines A11)
- O. Reg. 34/10 (Effective September 1, 2010), Section 31 is entitled “Circumstances in which certain benefits not payable and at s. 31(1)(a) which says:
- R.S.O. 1990, c. 18, Section 280(1) and (2) say:
- Jacob Johnson v. Jevco Insurance Decision and Order of the Licence Appeal Tribunal released April 1, 2020 at para. 1
- Ibid at paras. 6 and 26 (Caselines A11 and A15)
- Licence Appeal Tribunal, Animal Care Review Board, and Fire Commission Common Rules of Practice and Procedure, Version 1 (October 2, 2017) Rule 18 referred to at Reconsideration Decision released October 7 2020 at para. 1 (Caselines A18) Rule 18(1) states:
- Jacob Johnson v. Jevco Insurance Company Reconsideration Decision released October 7, 2020 at para. 21 (Caselines A22)
- Licence Appeal Tribunal Act, 1999 S.O. 1999, Ch 12, Sched. G, s. 11(1):
- Notice of Appeal (Appeal Book and Compendium of the Appellant Jevco Insurance Company T.1) (Caselines A4)
- Compulsory Automobile Insurance Act, R.S.O 1990, c.C.25 s. 2 (quoted at para. 16 herein)
- Supra (fn. 3) Part III (Insurance Contracts in Ontario) ss. 122-141
- Ibid Part VI (Automobile Insurance) ss.224-289
- Ibid s. 227(5)
- Ontario Automobile Policy (Appeal Book and Compendium of the Respondent T. C section 1.1) (Caselines B81)
- 2016 SCC 37
- Ontario Automobile Policy (OAP 1) Owner’s Policy s. 1.3 (Appeal Book and Compendium of the Respondent T. C (Caselines B81)
- Insurance Act, supra (fn. 3), s.224(1); “this part” as referred to in the section references Part VI of the Insurance Act entitled “Automobile Insurance”
- R.S.O 1990, c. H.8 s. 1
- Ibid s. 1
- Supra (fn. 10)
- Ibid at s. 2
- Ibid at s.1(1)
- Factum of the Appellant at para. 67 (Caselines A53) repeated at Factum of the Respondent at paras. 17 (Caselines B10)
- Factum of the Appellant at para. 69
- 2002 9225 (ON SC), 63 O.R. (3d) 615, [2002] O.J. No. 5314
- Ibid at para. 11
- Ibid at para. 1
- Ibid at paras. 17 and 19: The decision quoted at para. 17 is General Security Insurance Co. of Canada v. Belanger, 1975 207 (SCC), [1977] 1 S.C.R. 802, [1976] I.L.R. 1-785 at p. 811. At para.18 the Court also quotes from Hogan v. Kolisnyk 1983 1027 (AB QB), [1983] A.J. No, 846 (Quicklaw), [1983] 3 W.W.R. 481 (Q.B.) at para. 47, pp. 496-97 W.W.R.where the judge provided a more fulsome explanation of the policy rationale behind this understanding of the 14 day period:
- Ibid at para. 28: The rationale behind this concern was also reviewed in Hogan v. Kolisnyk, supra (fn. 26) as follows:
- Ibid at para. 27
- Ibid at para. 29
- Hunter Estate (Re), 65 O.R. (3d) 414, 173 OAC 25, [2003] CarswellOnt 2276, [2003] OJ No. 2395 (QL)
- Ibid at para. 4 (listing the then “agreed facts”)
- Ibid at paras. 8 and 9
- Ibid at para. 10
- Jacob Johnson v. Jevco Insurance Decision and Order of the Licence Appeal Tribunal released April 1, 2020 at paras. 21-24 (Caselines A14-A15)
- Jacob Johnson v. Jevco Insurance Company Reconsideration Decision released October 7, 2020 at para. 20 (Caselines A22)
- Factum of the Appellant at paras. 51-53
- Licence Appeal Tribunal, Animal Care Review Board, and Fire Commission Common Rules of Practice and Procedure, Version 1 (October 2, 2017) Rule 18.2