Neutral Citation: 1993 ONICDRG 75
File No. A-000951
ONTARIO INSURANCE COMMISSION
BETWEEN:
DOROTHY SETTLER
Applicant
and
CANADIAN GENERAL INSURANCE COMPANY
Insurer
File No. A-004495
AND BETWEEN
DOROTHY SITTLER
Applicant
and
PILOT INSURANCE COMPANY
Insurer
DECISION
Issues
The applicant, Dorothy Sittler, was injured in a motor vehicle accident on March 16, 1991. She claimed and received accident benefits from the Canadian General Insurance Company ("Canadian General") under Ontario Regulation 672 (the "No-Fault Benefits Schedule"), enacted under the Insurance Act, R.S.O. 1990, c. I.8. Canadian General contends that it is not liable to pay benefits to Mrs. Sittler, and that any benefits payable must be claimed from the Pilot Insurance Company ("Pilot"). Canadian General seeks reimbursement from Pilot of benefits paid to Mrs. Sittler.
The only issue in this hearing is:
Which insurer - Canadian General or Pilot - is liable to pay any no-fault benefits to which Mrs. Sittler is entitled?
Mrs. Sittler also claims her expenses incurred in the proceeding.
Result
Canadian General is liable to pay any no-fault benefits to which Mrs. Sittler is entitled.
Mrs. Sittler is entitled to be reimbursed by Canadian General for her expenses incurred in the proceeding.
The hearing may be reconvened to deal with any remaining issues between Mrs. Sittler and Canadian General.
Hearing
The hearing was held in North York, Ontario, on November 5, 1993, before me, Nancy Makepeace, arbitrator.
Present at the hearing were:
Applicant:
Mrs. Dorothy Sittler
Canadian General's Representative:
Lee Samis
Representative: Barrister and Solicitor
Pilot's Representative:
Rudolph Lobl
Barrister and Solicitor
Witnesses were:
Mrs. Sittler, the applicant
Ms. Sarah Davis, Underwriting Manager,
Facility Association Department
Canadian General
Mr. Roy Cooper
Insurance Broker, Town & Country Insurance
Exhibits introduced into evidence and other documents on the record are listed in Appendix 1.
Mr. Samis and Mr. Lobl filed written submissions and made oral submissions at the hearing. Cases referred to are listed in Appendix 2. Statutory and regulatory provisions referred to are set out in Appendix 3.
Evidence and Findings
Background
At the time of the accident, Mrs. Sittler was driving a cab owned by Harold Johnson, who rented it to Mrs. Sittler for $395 per week. The cab was insured under a policy with Canadian General, and Harold Johnson was a named insured on the policy. Mrs. Sittler owns a personal vehicle which is insured under a policy with Pilot, and Mrs. Sittler is a named insured on that policy.
Subsection 268(4) of the Insurance Act provides that in certain circumstances, an insured person who has recourse against more than one insurer may choose from which insurer to claim benefits. This is qualified by subsection 268(5), which provides that an insured person who is a named insured under a policy must claim benefits under that policy and cannot exercise the choice provided in subsection 268(4). However, an insured person who is a named insured under more than one policy may choose from which insurer to claim benefits. Subsection 3(1) of the No-Fault Benefits Schedule provides that the Schedule applies to certain individuals "as if the individual were a named insured".
Canadian General contends that Mrs. Sittler is not a named insured under its policy, and therefore, under subsection 268(5) of the Act, she must claim any benefits to which she is entitled from Pilot, under whose policy she is a named insured. Canadian General contends that the cab was not "rented" to Mrs. Sittler or "made available" for her "regular use", so as to bring her within subsection 3(1) of the Schedule. Canadian General also takes the position that even if subsection 3(1) applies to Mrs. Sittler, it does not affect the application of section 268 of the Act.
Pilot contends that subsection 3(1) of the No-Fault Benefits Schedule applies to Mrs. Sittler and gives her the same rights as a named insured under the Canadian General policy, including the right, under subsection 268(5) of the Act, to choose whether to claim benefits from either Canadian General or Pilot.
Findings of fact
I heard evidence about Canadian General's coverage of Mr. Johnson's cab from the applicant, Dorothy Sittler; Canadian General's underwriting manager, Sarah Davis; and the insurance broker who sold the policy, Roy Cooper. I found no substantial dispute between the two insurers with regard to any of the material facts in this case. No purpose was served by calling witnesses to testify about matters that could have been dealt with through an agreed statement of facts.
There was no dispute about the following facts, which I accept:
Mrs. Sittler drove the cab one shift a day, six days a week, and would have been entitled to drive it seven days a week. Mr. Johnson drove the other shift. No one other than Mr. Johnson and Mrs. Sittler drove the cab, and it was the only cab Mrs. Sittler drove at the time of the accident.
Mrs. Sittler paid Mr. Johnson $395 per week, in return for use of the cab. Her only other expense in driving the cab was gas. Her fares were hers to keep. Mrs. Sittler testified that the $395 covered her share of the cost of maintenance of the cab, air time, the cab licence, the brokerage name, and insurance.
The cab was insured by Canadian General. Harold Johnson was a named insured on the policy. Mrs. Sittler testified that when she began driving Mr. Johnson's cab, she provided him with information about her driver's licence and motor vehicle record for Canadian General's consideration.
She understood that this information was required so that Canadian General could assess her risk. She understood that she could not drive the cab until she was approved as a driver by Canadian General. She was approved. Mr. Cooper and Mrs. Sittler agreed in their testimony that the premium was paid only by Mr. Johnson, not Mrs. Sittler.
Sarah Davis, Canadian General's underwriting manager, testified that when underwriting an additional driver on a cab policy, Canadian General would find out the name of the additional driver, and order a motor vehicle record. Coverage would be denied only if the additional driver had no driver's licence, or the licence was suspended. An additional premium would be charged if the motor vehicle record showed that the additional driver had any major convictions or more than three minor convictions. No adjustment would be made on the basis of how regularly the additional driver drove the vehicle.
Ms. Davis and Roy Cooper, the broker who sold the policy, testified about Mr. Johnson's coverage. Mr. Johnson was insured as a named insured on the policy since March 30, 1987. Initially, he was the only person who drove the cab, and he was given a 10 per cent discount on his premium because the cab was only being driven for a single shift. When the policy was renewed September 30, 1988, Mr. Johnson lost the benefit of the 10 per cent discount because an additional driver, a Mr. G.B., had been listed on the policy and the cab was now being driven for two shifts.
Ms. Davis testified that in May, 1989, Canadian General was advised that Mrs. Sittler would replace Mr. G.B. as the additional driver of Mr. Johnson's cab. A motor vehicle record was ordered, which showed that Mrs. Sittler's driving record was satisfactory. Accordingly, the premium was not increased. No endorsement was prepared, but a memo on file records Mrs. Sittler as an additional driver.
Ms. Davis testified that taxi cabs are insured by the Facility Association because they are considered high risk. The six-month premium charged on Mr. Johnson's cab at the time of the accident in March, 1991 was $3,140.
Ms. Davis and Mr. Cooper testified that the Canadian General policy on the cab included an "SEF 6A" ("Standard Endorsement Form 6A") endorsement - which gave permission to carry passengers for compensation - and that this is the standard endorsement for taxi cabs. Canadian General knew from the outset that Mr. Johnson was using the vehicle as a cab. On cross-examination, Ms. Davis testified that the policy was not given an "SEF 5A" endorsement as a rental vehicle, and that no one had advised the insurer that the vehicle was being rented. Mr. Cooper testified that cabs are generally driven for two shifts, and it is understood in the industry that the cab is being leased if an additional driver is on the policy. He agreed with Mr. Samis that this is not the same arrangement as a rental or lease by a car rental company, which would require an "SEF 5A" endorsement.
Mrs. Sittler applied for no-fault benefits from Canadian General. Initially, she did not advise anyone at Canadian General about her policy with Pilot because she believed that "the insurance went with the car". Some time in the fall of 1992, a Canadian General adjuster asked Mrs. Sittler whether she had insurance on a personal car at the time of the accident. Mrs. Sittler told the adjuster about the Pilot policy.
Reasons
(a) Does Mrs. Sittler come within subsection 3(1)?
Subsection 3(1) of the No-Fault Benefits Schedule provides as follows:
If the insured automobile is made available for the regular use of an individual, whether or not a resident of Ontario, by a corporation, unincorporated association, partnership, sole proprietorship or other entity or is rented to an individual who is a resident of Ontario, this Schedule applies to the individual and his or her spouse and their dependants as if the individual were a name insured.
Subsection 3(1) applies in two situations - (i) if the insured vehicle was made available for the regular use of the insured person by a corporation, unincorporated association, partnership, sole proprietorship or other entity; or (ii) if the insured vehicle was rented to the insured person.
On behalf of Canadian General, Mr. Samis submitted that the "regular use" branch of subsection 3(1) was intended to apply where a "company" car is made available for employee use.
Nothing in subsection 3(1) restricts the "regular use" branch to the company car situation, and I do not accept that it is restricted in that way. Mrs. Sittler drove Mr. Johnson's cab for 12 hours a day, six days a week, for the purpose of earning her living. That is "regular use" by any definition. There is no question that the cab was "made available" to her by Mr. Johnson, and that Mrs. Sittler is an "individual". Finally, I find that Mr. Johnson operated as a "sole proprietorship or other entity". Mr. Johnson owned the cab, the plate, and all the rights that go with it. He operated the cab as his business, and made it available to Mrs. Sittler for the purpose of her business.
I find that the cab was made available for Mrs. Sittler's regular use by a sole proprietor or other entity.
Mr. Samis submitted that the "rental" branch of subsection 3(1) was intended to cover rentals by companies whose business it is to rent vehicles. He submitted that the fee Mrs. Sittler paid for the right to use the cab was not a rental fee but a fee for a whole package of services.
The word "rented" is not defined in subsection 3(1). Nothing in the section supports the restrictive interpretation Mr. Samis would give it. Mrs. Sittler paid Mr. Johnson a fee of $395 per week for the right to drive the cab one shift per day, seven days a week, for the purpose of carrying paying passengers. It makes no difference, in my view, how the fee was calculated, or that some part of the fee may have been attributable to vehicle maintenance, plate rental, or air time. Payment of an agreed fee for use of a vehicle (or equipment or property) for a specified period of time is a "rental", in my view.
I find that Mrs. Sittler falls within the plain meaning of both the "regular use" and the "rental" branch of subsection 3(1).
(b) Is Mrs. Sittler entitled to claim benefits from Canadian General?
Subsection 3(1) provides that where the insured automobile is rented or made available for regular use, the Schedule applies to the individual "as if the individual were a named insured".
Nowhere in the Act or Schedule is "named insured" defined. However, "insured" is defined in subsection 224(1) of the Act:
(1) In this Part,...
"insured" means a person insured by a contract whether named or not and includes every person who is entitled to no-fault benefits under the contract whether or not described therein as an insured person; [emphasis added]
Section 270 provides as follows:
Any person insured by but not named in a contract to which section 265 or 268 applies may recover under the contract in the same manner and to the same extent as if named therein as the insured, and for that purpose shall be deemed to be a party to the contract and to have given consideration therefor. [emphasis added]
Arbitrator Palmer considered the effect of these provisions in Cattrysse and The Westminster Mutual Fire Insurance Company; Cattrysse and Anglo Canada General Insurance Company, Commission File Nos. A-001618 and A-001789, dated June 21, 1993 (under appeal). She made the following comments about the effect of section 270, with which I concur:
... I take the words "any person insured by but not named in a contract" to mean "any person insured by a contract, who is not the named insured", because the rest of the section goes on to describe the rights of that person as equal to those of a "person named therein as the insured". Such persons may recover under the policy in the same manner and to the same extent as if they were named insureds. An example of such a person is to be found in the interpretation section, s. 3(1) of the Schedule -- the individual for whose regular use an automobile is made available. Other examples can be found readily in section 2 of the Schedule.
In my view, the effect of subsection 3(1) of the Schedule is that the persons to whom it applies have the same rights as named insureds for the purposes of the Schedule. I find that the legislative intention underlying subsection 3(1), along with subsection 2 of the Schedule and sections 224 and 270 of the Act, was to put insured persons in the same position as named insureds for the purpose of claiming no-fault benefits. This is consistent with the remedial nature of the no-fault scheme, which is intended to be non-technical and non-legalistic.
Mr. Samis relied on the Court of Appeal decision in the case of Collins v. Wright (1988), 1988 CanLII 10406 (ON HCJ), 31 C.C.L.I. 19 (Ont. H.C.J.), affirmed [1989] O.J. 2416 (Ont. C.A.). The issue in Collins v. Wright was the application of subsection 209(1) of the Act (R.S.O. 1980) [now subsection 239(1) of R.S.O. 1990], which provides that the policy insures "the person named therein" and "every other person" who drives "with the named person's consent". The policy listed the owner of the car as the named insured, and her son was listed as principal driver. At the time of the accident, the car was being driven by the son's girlfriend. She had the son's consent to drive the car, but the mother did not consent. The Court held that the principal driver was neither the named insured nor "the person named therein", and therefore that the vehicle was being driven without "the named person's consent".
In my view, Collins v. Wright does not apply to the issue before me, which is whether subsection 3(1) of the No-Fault Benefits Schedule gives Mrs. Sittler the same rights as a named insured for the purposes of subsection 268(5) of the Act. Moreover, the decision pre-dated Bill 68; the Court did not consider the effect of the amendments introduced by that legislation.
Mr. Samis submitted that subsection 3(1), which is regulation, must be interpreted so as not to conflict with the priority rules set out in section 268 of the Act. I find no conflict between subsection 3(1) and section 268. Subsection 268(5) sets out general rules concerning choice of insurers, where a person is a named insured under one or more policies. Subsection 3(1) sets out specific rules providing that certain individuals are to be treated "as if named insureds, for the purposes of the No-Fault Benefits Schedule. Furthermore, the legislative intention to give insured persons the same rights as named insureds for the purposes of no-fault benefits is not just found in subsection 3(1) of the Schedule - it is also evident in sections 224 and 270 of the Act. In my view, section 268 must be given an interpretation which accords with its ordinary grammatical meaning considered in harmony with the intent of the statute as a whole.
Mr. Samis submitted that someone who is "as if a named insured" is not a "named insured". On behalf of Pilot, Mr. Lobl relied on the definition of "as" in Black's Law Dictionary, 5th Ed., which includes the following:
means like, similar to, of the same kind, in the same manner, in the manner in which.
I accept Mr. Lobl's submission that "as if” is a term of comparison, not a term of contrast. Moreover, I find that any ambiguity in the phrase "as if" is resolved by reference to sections 224 and 270 of the Act.
The no-fault scheme was intended to be workable and reasonable in the context of the practices of the insurance industry. In the Supreme Court of Canada decision, Consolidated-Bathurst Export Limited v. Mutual Boiler and Machinery Insurance Company, 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888, Mr. Justice Estey, speaking for the majority, said,
It is trite to observe that an interpretation of an ambiguous contractual provision which would render the endeavour on the part of the insured to obtain insurance protection nugatory, should be avoided. Said another way, the courts should be loath to support a construction which would either enable the insurer to pocket the premium without risk or the insured to achieve a recovery which could neither be sensibly sought nor anticipated at the time of the contract. (at 901-2)
The reasonable expectations of the parties were also considered in interpreting an ambiguous provision of the policy at issue in the Ontario Court of Appeal decision in Wiggle et al. v. Allstate Insurance co. of Canada (1984), 1984 CanLII 45 (ON CA), 49 O.R. (2d) 101. I find that any ambiguity in subsection 3(1) of the Schedule and section 268 of the Act must be resolved by consideration of what arbitrator Palmer called "the principle of fair exchange or of a fair indemnity received for premium paid".
It was Canadian General - not Pilot - that assessed Mrs. Sittler's risk as a cab driver and charged Mr. Johnson a premium based on that assessment. I find that the premium charged by Canadian General related to the specific risk posed by Mrs. Sittler in four ways: (i) the vehicle was insured by the Facility Association at a rate higher than the rate charged the "regular market" because it was being driven as a cab; (ii) the premium was 10 per cent higher than it would otherwise have been because an additional driver was on the policy; (iii) coverage would have been denied if Canadian General had determined that Mrs. Sittler had no valid driver's licence; and (iv) if Mrs. Sittler's driving record had shown any major convictions or more than three minor convictions, an additional premium would have been charged. I heard no evidence, on the other hand, that Mrs. Sittler gave Pilot information about her arrangement with Mr. Johnson or that Pilot based her premium on the risk related to driving the cab. For these reasons, I find that Pilot's interpretation of the provisions at issue is the more reasonable one from the point of view of both the underwriter and the consumer.
I find that subsection 3(1) of the Schedule creates a new class of insureds, who are "as if a named insured". The provision gives these individuals the same rights as a named insured for purposes of no-fault benefits. These rights include the right, under subsection 268(5) of the Act, to elect from which insurer to claim benefits, if the insured person is named (or "as if named") under more than one policy.
I find that Mrs. Sittler is "as if a named insured" under the Canadian General policy issued to Harold Johnson. Mrs. Sittler has elected to claim benefits from Canadian General, as she is entitled to do under subsection 268(5) of the Act. Canadian General is liable to pay any no-fault benefits to which Mrs. Sittler is entitled. The hearing may be reconvened to deal with any remaining issues between Mrs. Sittler and Canadian General.
EXPENSES
Mrs. Sittler claims her expenses in the arbitration. An award for expenses may be made under section 282(11) of the Insurance Act. The prescribed expenses and maximum 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.
In the circumstances of this case, I find it appropriate to award Mrs. Sittler her expenses in the arbitration. The issue in this hearing was a dispute between two insurers.
I have found that Canadian General is liable to pay any no-fault benefits to which Mrs. Sittler is entitled. Mrs. Sittler has claimed benefits from Canadian General from the time of the accident, and she has never claimed benefits from Pilot. I heard no evidence of any conduct on the part of Pilot which might have prejudiced Canadian General in its pursuit of this issue. I find this to be an appropriate case in which to exercise my discretion to order Canadian General to pay the expenses payable.
Order
Canadian General is liable to pay any no-fault benefits to which Mrs. Sittler is entitled.
The hearing may be reconvened to deal with any remaining issues between Mrs. Sittler and Canadian General.
Mrs. Sittler is entitled to be reimbursed by Canadian General for her expenses incurred in respect to the arbitration. I remain seized of any dispute the parties may have about the amount of expenses payable.
December 3, 1993
Nancy Makepeace
Arbitrator
Date
APPENDIX 1 - THE RECORD
Exhibits:
The following exhibits were introduced into evidence at the hearing:
Exhibit 1
Application for accident benefits
Exhibit 2
Documents from Canadian General's underwriting file
Other documents on the record were:
Reports of Mediator, dated January 7, 1992 (Canadian General) and May 11, 1993 (Pilot)
Application for Appointment of Arbitrator, dated May 11, 1993 (Canadian General and Pilot)
Responses of Insurers, dated June 23, 1993 (Pilot) and June 24, 1993 (Canadian General)
Letter of pre-hearing arbitrator, dated October 1, 1993
APPENDIX 2 - CASES CITED
The following cases were cited:
Cattrysse and The Westminster Mutual Fire Insurance Company; Cattrysse and Anglo Canada General Insurance Co., OIC File Nos. A-001618 and A-001789, dated June 21, 1993 (under appeal)
Collins v. Wright (1988), 1988 CanLII 10406 (ON HCJ), 31 C.C.L.I. 19 (Ont. H.C.J.), affirmed [1989] O.J. 2416 (Ont. C.A.)
Regna v. Greening Industries Ltd. (1968), [1969] 1 O.R. 759
Belanger v. The King (1916), 1916 CanLII 87 (SCC), 54 S.C.R. 265
McDonald v. Brunette Saw Mill Company, 1922 CanLII 747 (BC SC), [1922] 1 W.W.R. 1163
Consolidated-Bathurst Export Limited v. Mutual Boiler and Machinery Insurance Company, 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888 (S.C.C.)
Wiggle et al. v. Allstate Insurance co. of Canada (1984), 1984 CanLII 45 (ON CA), 49 O.R. (2d) 101 (Ont. C.A.)
APPENDIX 3 - STATUTORY AND REGULATORY PROVISIONS CITED
Sections 224 and 270 of the Insurance Act and subsection 3(1) of the No-Fault Benefits Schedule were cited, and the text of those provisions was set out in the decision.
The following were also cited:
Insurance Act, section 268
(2) The following rules apply for determining who is liable to pay no-fault benefits:
- In respect of an occupant of an automobile,
I. the occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured,
ii. if recovery is unavailable under subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant.
(3) An insurer against whom a person has recourse for the payment of no-fault benefits is liable to pay the benefits.
(4) If, under subparagraph i or iii of paragraph 1 or subparagraph i or iii of paragraph 2 of subsection (2), a person has recourse against more than one insurer for the payment of no-fault benefits, the person, in his or her absolute discretion, may decide the insurer from which he or she will claim the benefits.
(5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is the spouse or a dependant, as defined in the No-Fault Benefits Schedule, of a named insured, the person shall claim no-fault benefits against the insurer under that policy and, if there is more than one such policy, the person, in his or her discretion, may decide the insurer from which he or she will claim the benefits.
The following provisions of the regulation were cited:
Section 2. In this Schedule,...
"insured automobile", in respect of a particular motor vehicle liability policy, means the described automobile and includes a newly-acquired or temporary substitute automobile, all as defined by the policy;
"insured person", in respect of a particular motor vehicle liability policy, means,
(c) the named insured, his or her spouse and any dependant of either of them while the occupant of any other automobile,