Neutral Citation: 1993 ONICDRG 43

File No. A-001198

ONTARIO INSURANCE COMMISSION

BETWEEN:

JAMES TRAGANIS

Applicant

and

SECURITY NATIONAL INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

Issues

The applicant, James Traganis, was injured in a motor vehicle accident on June 22, 1990. He applied for and received weekly income benefits from the insurer, Security National, payable under Ontario Regulation 672 (the "No-Fault Benefits Schedule"), enacted under the Insurance Act, R.S.O. 1990, c. I.8. Security National claims that Mr. Traganis is excluded from receiving weekly income benefits under clause 17(1)(c) and clause 17(1)(d) of the Schedule. Mediation was unsuccessful in resolving the dispute between the applicant and the insurer, and the applicant applied for arbitration under the Insurance Act.

The preliminary issues in this arbitration are:

1. Is Mr. Traganis excluded from receiving weekly income benefits on the basis of clause 17(1)(c) or clause 17(1)(d) of the No-Fault Benefits Schedule?

2. The insurer seeks repayment of weekly income benefits paid to Mr. Traganis.

3. Mr. Traganis claims his expenses incurred in the proceeding.

Result

1. Mr. Traganis is not excluded from receiving weekly income benefits.

2. Mr. Traganis is entitled to his expenses incurred in the proceeding.

The hearing will be reconvened to deal with any remaining issues, including Mr. Traganis' request for a special award under subsection 282(10) of the Act.

Hearing

The hearing was held in North York, Ontario, on June 15, 1993, before me, Nancy Makepeace, arbitrator.

Present at the hearing were:

Mr. James Traganis, the applicant

Mr. David Gillespie, Barrister and Solicitor, the applicant's representative

Mr. Douglas Strelshik, Barrister and Solicitor, the insurer's representative Documents on the record were:

Report of Mediator, dated March 6, 1992

Application for Appointment of an Arbitrator, dated October 27, 1992

Response by Insurer, dated November 27, 1992

Amended Response by Insurer, dated December 15, 1992

Letter of pre-hearing arbitrator Fred Sampliner, dated March 18, 1993

Letter of pre-hearing arbitrator Janice Mackintosh, dated April 30, 1993

The parties introduced an agreed statement of facts. Mr. Strelshik filed an arbitration brief. The cases included in the brief are listed in Appendix 1 to this decision. Statutes referred to by the parties are listed in Appendix 2.

Reasons

1. EXCLUSIONS

Background Facts and Issues

The parties agreed to the following facts:

1. Mr. Traganis was driving his own motor vehicle at the time of the accident.

2. Mr. Traganis had previously insured the motor vehicle with another insurance company which was not a party to this application.

3. Security National was the insurer of another motor vehicle involved in the accident.

4. Mr. Traganis held a valid licence at the time of the accident.

5. Mr. Traganis was charged in connection with the accident under subsection 2(1) of the Compulsory Automobile Insurance Act, R.R.O. 1990, c. C.25, which provides as follows:

2(1) Subject to the regulations, no owner 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.

6. Mr. Traganis was not convicted of that offence; the charge was withdrawn. He pleaded guilty to an offence under subsection 3(1) of the Compulsory Automobile Insurance Act. That provision is as follows:

3(1) An operator of a motor vehicle on a highway shall have in the motor vehicle at all times,

(a) an insurance card for the motor vehicle; or

(b) an insurance card evidencing that the operator is insured under a contract of automobile insurance.

Mr. Traganis claims that he is entitled to ongoing weekly income benefits and supplementary medical and rehabilitation benefits under the Schedule. He claims that Security National is liable to pay no-fault benefits under paragraph of subsection 268(2) of the Act. Security National claims that Mr. Traganis is precluded from receiving weekly income benefits under clause 17(1)(c) and clause 17(1)(d) of the No-Fault Benefits Schedule, and seeks repayment of benefits already paid.

Findings

Clauses 17(1)(c) and (d) of the No-Fault Benefits Schedule provide as follows:

17 (1) The insurer is not required to pay benefits under subsection 12(1) or 13(1) in respect of a driver of an automobile at the time of the accident,

(c) if, as a result of the accident, the driver is convicted of operating the automobile while it was not insured under a motor vehicle liability policy;

(d) if the driver was not authorized by law to drive the automobile;

Mr. Strelshik, on behalf of Security National, submitted that Mr. Traganis is excluded under clause 17(1)(c) even though he was not convicted of "operating the automobile while it was not insured under a motor vehicle liability policy", the offence set out in subsection 2(1) of the Compulsory Automobile Insurance Act. He relied on the remedial character of the legislation and submitted that the legislature could not have intended a person who was "factually guilty" of this offence to be able to claim weekly income benefits.

In my view, clause 17(1)(c) is clear and unambiguous: a conviction is required. In the absence of a conviction, the plain language of the provision does not permit me to consider whether Mr. Traganis was driving his own vehicle without insurance at the time of the accident. Nor does clause 17(1)(d) apply in these circumstances; if it did, the requirement of a conviction in 17(1)(c) would be meaningless.

Mr. Strelshik also submitted that Mr. Traganis is excluded under clause 17(1)(d) because he was convicted of an offence under subsection 3(1) of the Compulsory Automobile Insurance Act.

I cannot agree. Clauses 17(1)(a), (b) and (c) exclude drivers who have been convicted of certain specified offences. It would have been an easy matter for the legislature expressly to exclude drivers who have been convicted of an offence under subsection 3(1) of that Act.

I find that the phrase "authorized by law" refers to licensing matters. Subsection 17(2) provides as follows:

Clause (1)(d) does not apply to a driver who is not authorized by law to drive an automobile only by reason of a suspension of a licence for failure to pay a fine.

In my view, the express reference to licensing in subsection 17(2) indicates that the exclusion to which it is an exception also deals with licensing matters.

Mr. Strelshik referred me to a number of decisions interpreting the phrase "not authorized by law to drive the vehicle". In particular, he relied on Blatter v. Insurance Corporation of British Columbia, a decision of the British Columbia Supreme Court. The driver in that case held a valid learner's permit, but at the time of the accident he was carrying a passenger, in contravention of a prohibition set out in regulations under the British Columbia Insurance (Motor Vehicle) Act. The Court held that the driver was not authorized by law to drive the motor vehicle, though he held a valid driver's licence.

In my view, the decisions relied on by Mr. Strelshik do not establish that a driver who contravenes compulsory insurance legislation is excluded as "not authorized by law" to drive the motor vehicle. All of the decisions relied upon deal with contravention of licence restrictions or prohibitions. In this case, the parties agreed that Mr. Traganis held a valid licence at the time of the accident, and I heard nothing to suggest that he was in breach of any licence restriction or prohibition.

Mr. Strelshik submitted that clauses 17(1)(c) and (d) should be interpreted in accordance with the principle that no-fault benefits are intended to be available to persons who pay for and are insured under a contract of insurance. However, insurers may also be liable to provide no-fault benefits to persons who are strangers to the insurance policy under which the claim is made. It is clear that Mr. Traganis may claim against Security National under paragraph of subsection 268(2) of the Act, though he held no policy with that insurer, if he is not excluded under section 17 of the Schedule. I find no absurdity in this result.

I find that clauses 17(1)(c) and (d) of the Schedule, interpreted in accordance with their ordinary meaning and their statutory context and purpose, do not apply in the circumstances of this case. Furthermore, it is trite law that exclusions are to be defined narrowly and that the onus of proving that the exclusion applies falls on the party seeking to rely on the exclusion. If there is any ambiguity in these provisions, it must be interpreted in favour of Mr. Traganis.

2. SPECIAL AWARD

Mr. Gillespie, on behalf of Mr. Traganis, seeks a special award under subsection 282(10) of the Act, which provides as follows:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the No-Fault Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

Whether Mr. Traganis is entitled to an award of benefits and interest is an issue to be determined in the reconvened hearing in this matter. Accordingly, the application for a special award will be dealt with in my final decision, following the reconvened hearing.

3. EXPENSES

Mr. Traganis seeks an award of the expenses he has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:

The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.

The prescribed expenses and amounts are set out in Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664 (R.R.O. 1990), Dispute Resolution Expenses.

Mr. Traganis was successful in his application on the preliminary issue, and there was no impropriety or undue delay in the conduct of the proceeding. In the circumstances, I find that Mr. Traganis is entitled to his expenses in this proceeding. If the parties are unable to agree on the amount of expenses, I remain seized of this matter and either party may apply for assessment of the expenses before me.

Order

1. Mr. Traganis is not excluded from receiving weekly income benefits on the basis of clause 17(1)(c) or (d) of the No-Fault Benefits Schedule.

2. Mr. Traganis is entitled to his expenses incurred in the proceeding. I remain seized with regard to any issue about the amount of expenses payable.

The hearing will be reconvened to deal with any remaining issues, including Mr. Traganis' request for a special award under subsection 282(10) of the Act.

July 30, 1993

Nancy Makepeace

Arbitrator

Date

APPENDIX 1 - CASES

Blatter v. I.C.B.C. (1984), 1984 CanLII 560 (BC SC), 7 C.C.L.I. 61 (B.C.S.C.)

M.P.I.C. v. Brandt (1991), 1991 CanLII 11856 (MB QB), 48 C.C.L.I. 187 (Man. Q.B.)

Peet v. Ethier (1987), 1987 CanLII 9929 (SK QB), 26 C.C.L.I. 42 (Sask. Q.B.)

Phoenix Assurance Co. of Canada v. Robichaud (1984), 1984 CanLII 4115 (NB QB), 5 C.C.L.I. 139 (N.B.Q.B.)

Platts v. I.C.B.C. (1986), 1986 CanLII 7781 (BC SC), 17 C.C.L.I. 153 (B.C.S.C.)

R. v. Smith (1978), 1978 CanLII 2394 (SK QB), 39 C.C.C. (2d) 205 (Sask. Q.B.)

APPENDIX 2 - STATUTES

Compulsory Automobile Insurance Act, R.R.O., c. C.25

Interpretation Act, R.R.O. 1990, c.