Neutral Citation: 1994 ONICDRG 120

File No. A-005561

BETWEEN:

TINH DONG LE

Applicant

and

THE DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

The Applicant, Tinh Dong Le, was injured in a motor vehicle accident on March 10, 1993. He applied for weekly income benefits from the Insurer, The Dominion of Canada General Insurance Company ("Dominion"), payable under Ontario Regulation 672¹. Dominion refused benefits. Dominion alleges that Mr. Le misrepresented material facts in his application for insurance and is therefore precluded from claiming benefits.

The parties were unable to resolve their disputes through mediation and the Applicant applied for arbitration under the Insurance Act (the "Act"), R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Is Mr. Le precluded, under section 17(3)(a) of the Schedule, from receiving weekly income benefits?
Is Mr. Le entitled to his expenses incurred in the arbitration?
Is Dominion entitled to an award of $1,000 under subsection 282(11.2) of the Act?

Mr. Le is precluded from receiving weekly income benefits.
Mr. Le is not entitled to his expenses incurred in the arbitration.
Mr. Le is not required to pay Dominion an amount under subsection 282(11.2) of the Act.

The hearing was held in North York, Ontario, on April 25, 1994, before me, Nancy Makepeace, arbitrator. Post-hearing written submissions were completed on May 30, 1994.

Present at the hearing:

Applicant:

Tinh Le

Applicant's Michael Representative:

Gillen

Barrister and Solicitor

Insurer's Representative:

Chris Schnarr

Barrister and Solicitor

Witnesses:

Tina Huong, insurance broker

Velma Carter, supervisor of records, Ministry of Transportation

David Payette, territorial underwriting manager, Dominion

Michael Stinson, manager of special accounts, Guardian Insurance Company of Canada

Tinh Dong Le, the Applicant

Yen Nguyen, the Applicant's friend

Mr. Chau Tran provided translation for Mr. Le in the Vietnamese language.

Exhibits and other documents on the record are set out in Appendix A.

Order of Proceeding:

At the outset of the hearing, Mr. Gillen moved that the usual order of proceeding be reversed. The parties agreed that the onus is on the Insurer to prove that the Applicant is excluded from claiming benefits. Accordingly, I granted the motion, and ordered the Insurer to present its case first. However, the parties agreed that Mr. Le would be excluded from the hearing room while Ms. Huong gave her testimony.

Background Facts and Issues:

The Insurer alleges that in applying for insurance, Mr. Le knowingly misrepresented his driving history, marital status and claims history. The Insurer further alleges that the misrepresentations were material to the contract, and therefore the policy is void ab initio, and he is precluded from claiming weekly income benefits.

It is undisputed that on March 5, 1993, Tinh Le met with Tina Huong, an insurance broker with Smith McNaughton Insurance. Accompanying Mr. Le were his friend, Yen Nguyen, and his uncle, Truong Do. Mr. Le, Mr. Nguyen and Ms. Huong testified about the meeting. David Payette, territorial underwriting manager for Dominion, testified about the Insurer's subsequent handling of the application. Based on this testimony, I accept the following facts, which are undisputed:

The March 5, 1993 meeting was conducted almost entirely in Vietnamese, with only a few words spoken in English. First, Mr. Nguyen applied for automobile insurance, then Mr. Le.
Ms. Huong completed an Application for Automobile Insurance on Mr. Le's behalf (completed application at Exhibit 1, Tab 5). She did this by asking him questions and recording his answers. She then handed the form to Mr. Le and he signed it.
The rating information was added later by Ms. Huong. She testified that rating class "9" indicates that the applicant is married, while the numeral "4" under "driving record" indicates that the premium would be based on four years accident-free driving.
Mr. Le had indicated that Allstate Insurance Company was his former automobile insurer. On March 8 or 9, Ms. Huong called Allstate and was told the number and expiry date of the policy. She entered this information on the application.
Dominion received Mr. Le's application on March 10 or 11. Routine enquiries were done (Driving Record and Automobile Underwriting Inquiry, dated March 18, 1993, Exhibit 1, Tab 6).
The Driving Record enquiry indicated that Mr. Le's licence was suspended between April 9 and June 5, 1990, because of accumulated demerit points.
On March 10, 1993, Mr. Le was involved in a motor vehicle accident. He applied for accident benefits on March 15, 1993 (Exhibit 1, Tab 1).
On March 30, 1993, Dominion advised him that benefits were denied. The letter, from Terry Matthews, Personal Lines Underwriting, was as follows (Exhibit 1, Tab 2):

This is to advise you that the undersigned, Dominion of Canada General Insurance Company repudiates all liability extended to you and to anyone as Named Insured on the grounds that said Policy never attached by virtue of Section 206(1) of the Insurance Act. Any claim hereunder is invalid and the right of any Insured to recover indemnity is forfeited by reason of the fact that you knowingly failed to disclose facts required to be stated on the application. Your answer to Item 4(a) on the application, "To the knowledge of the applicant, has any driver's licence, vehicle permit or similar authorization issued to any person in the household or business been suspended or cancelled within the last six years?" was "No", whereas we have evidence that your automobile licence had been suspended on April 9, 1990.

Enclosed is our cheque in the amount of $159.00, which represents the entire premium paid by you in connection with this Policy.

In the event that this Insurance Company is obligated to pay any claims by reason of the provisions of the said Insurance Act, you will be liable to pay or reimburse to the Insurers in the amount so paid.

[emphasis added]

A Driving Record Statement, dated January 10, 1994, prepared by the Ministry of Transportation (Exhibit 1, Tab 4) indicates that on February 28, 1989, Mr. Le was convicted of failing to yield right of way, and on February 15, 1990, he was convicted of speeding 125 kilometres per hour in a 100 kilometres per hour zone. He had received his licence on October 13, 1988.

The Insurer relies on section 17(3)(a) of the Schedule, which provides as follows:

17.--(3) The insurer is not required to pay benefits under subsection 12(1) or 13(1),

(a) in respect of any person who has made, or who knows of, a material misrepresentation which induced the insurer to enter into the contract of automobile insurance or who intentionally failed to notify the insurer of a change in the risk material to the contract.

Reasons:

Question 4(a) on the application form (Exhibit 1, Tab 5) reads, "[t]o the knowledge of the applicant, has any driver's licence, vehicle permit or similar authorization issued to any person in the household or business been suspended or cancelled within the last 6 years?" The "no" box is checked off. In his testimony, Mr. Le did not dispute that he was asked this question and answered "no". His evidence was that he had his licence in his possession at all times, and did not know it had been suspended.

Question 5 of the application form asks, "[g]ive details of all convictions arising from the operation of any automobile in the last 3 years". The answer noted is "nil". At the hearing, Mr. Le admitted to the convictions, and admitted that he had not disclosed them. Neither of Mr. Le's convictions were within the three years prior to the date of the application. However, the licence suspension which followed did occur within three years of the application.

Mr. Le's Driving Record (Exhibit 1, Tab 4 and Exhibit 4), and a Notice of Suspension of Driver's Licence addressed to Mr. Le (Exhibit 3), were entered into evidence. Both documents were prepared and issued by the Ministry of Transportation. The Notice is dated March 28, 1990, and indicates that Mr. Le's licence will be suspended effective April 9, 1990, because of accumulated demerit points while on probation. The Notice also states that the suspension will expire 30 days after the licence is returned. The Driving Record indicates that Mr. Le's licence was returned to the Ministry on May 6, 1990, and the suspension expired on June 5, 1990.

Consistent with the Driving Record, the receipt form (Exhibit 3) indicates that Mr. Le's licence was returned on May 6, 1990. The receipt form includes a space for the licence to be copied, but the space is blank. However, when Mr. Le moved out of Ontario and returned his licence in 1994, a copy of the licence was filed in Ministry records (Exhibit 3).

Velma Carter, supervisor of records, Ministry of Transportation, testified about the Ministry's licence suspension procedures. She testified that different units of the Ministry would have received Mr. Le's returned licence in 1990 and 1994, and that the unit that received Mr. Le's licence in 1990 had stopped photocopying licences onto the "Receipt" form in order to save money.

The Notice of Suspension was sent by registered mail. However, Ms. Carter admitted that there is no way to determine whether the Notice was received by Mr. Le or returned by the post office. She admitted that the Ministry does not record who returned the licence. She pointed out that the driver's licence number recorded on the 1990 receipt is the same as the number on the photocopied licence returned in 1994.

The Notice of Suspension was addressed to Mr. Le at 10 A. Drive, Apt. 104, in Waterloo, Ontario. This is also the address noted in the Driving Record. Mr. Le admitted that it was his correct address at the time. He also admitted that the other changes of address noted on the Driving Record are accurate. Finally, he admitted that he returned his licence in 1994 when he moved to British Columbia. Clearly, Mr. Le had some familiarity with his legal obligations as a licensed driver.

The standard of proof in establishing that an insured person is excluded from receiving benefits is the civil standard of balance of probabilities. In my view, the Ministry's records, created in the ordinary course of business, are likely to be accurate. I can think of no reason why the Ministry would have completed a Receipt of Licence Form, and subsequently reinstated privileges, if the licence was not returned. Further, there is no reason to believe that the licence was returned by someone other than Mr. Le, who would normally have it in his possession. On balance, I am satisfied that Mr. Le received the Notice of Suspension, returned his driver's licence, and had his driving privileges reinstated one month later. Accordingly, I am satisfied that Mr. Le knowingly misrepresented his driving history in his answer to question 4(a) of the application.

Given my finding on this point, it is not necessary for me to consider the parties' submissions as to whether section 17(3)(a) of the Schedule requires that the misrepresentation be made "knowingly". I do not accept Mr. Gillen's submission that the Insurer must prove an intent to deceive in order to bring the insured within section 17(3)(a) of the Schedule. This proposition is not supported by the Act, the Schedule, or the case law referred to by the Applicant.

It was submitted, on behalf of the Applicant, that the information set out on the application form was inaccurate because of language difficulties. Mr. Le testified that he was unable to read the completed application form Ms. Huong handed to him. Mr. Gillen submitted that, for this reason, it was important for Ms. Huong to complete the form accurately and completely. He relied on Hansra v. York Fire & Casualty Insurance Co. (1982), 1982 CanLII 2005 (ON HCJ), 38 O.R. (2d) 281 (Co.Ct.), in which the law relating to subsection 233(1)(a) was reviewed as follows:

The general rule is, however, that where a person signs an application for automobile insurance which contains untrue statements he "knowingly" makes a misrepresentation. The general rule applies where the applicant possesses information that the statements are untrue even though the applicant did not complete the application himself and signed it without reading it: Sleigh v. Stevenson, [1943] O.W.N. 465...(C.A.). The reason for the rule appears to be based on case law that when an agent fills in an answer for the insured on an insurance application he does so, not as the agent of the insurer, but as the amanuensis of the insured. The latter by signing the application adopts the answers therein and makes them his own: Newsholme Brothers v. Road Transport and General Ins. Co., Ltd.....

There is a duty on the applicant to read the answers which the agent has filled in before signing the application....

Even where the applicant for insurance is illiterate, with the exception of signing his own name, if he answers a question put to him by the agent, knowing his answer is untrue, he will be bound by the answer....It is not necessary that the applicant know that the effect of the nondisclosure vitiates the policy....

When the applicant for insurance does not, however, understand English, and the questions to which false answers were recorded were not read or explained to him in any language he did understand, the court has held that the misrepresentation is not knowingly made....Similarly, where the agent generally translates a question to a person whose mother tongue is not English in such a fashion that the question is not reasonably designed to obtain from the applicant the information which was withheld an innocent misrepresentation occurs and the claim is not invalidated....

On behalf of the Insurer, Mr. Schnarr submitted that an insured is obliged to consider the completed application for insurance before signing it [North American Life Assurance Co. v. Caputo (1989), 1989 CanLII 10433 (ON HCJ), 41 C.C.L.I. 104 (Ont. H.C.J.)].

Vietnamese is the native language of Mr. Le and Ms. Huong, and they agreed in their testimony that the meeting was conducted almost entirely in that language. I heard no evidence that Mr. Le at any time requested clarification of any of Ms. Huong's questions. None of the evidence suggests that Mr. Le and Ms. Huong had any difficulty conducting their business in Vietnamese.

Mr. Le testified that he can speak "a little" English, and can read a street sign, but not a newspaper. I think he probably has more facility in English than he admits. Although he testified through an interpreter, he began to answer several questions before they were translated. Mr. Le is 26 years old. He arrived in Canada in 1985, some nine years ago. He testified that he attended Canadian schools for several years, including Kitchener Collegiate Institute, where he spent one or two years. He also took a welding course and he testified that he held many welding jobs before the accident. He admitted that he has taken instructions on the job in English. He also admitted that he has completed various forms in English, asking for help when necessary.

I heard no evidence to suggest that Mr. Le asked any questions of Ms. Huong after she handed him the completed application form. I do not accept that language difficulties prevented the Applicant from understanding Ms. Huong's written questions or her notations on the completed form.

Mr. Le and Ms. Huong disagreed about the scope of Ms. Huong's questions. She testified that she went through the questions on the application form one by one. He testified that she asked him a few questions, then focused on the type of coverage he wanted. I think it is likely that Ms. Huong's questions were not as thorough as she suggested at the hearing. However, I am satisfied that her questions were "reasonably designed to obtain...the information" sought, to adopt the language used by the court in Hansra (supra). In the circumstances of this case, I find that it was Mr. Le's obligation to ensure the accuracy of the application form.

Question 10 of the application form includes the following (Exhibit 1, Tab 5):

The answers to items 1 to 5 and any particulars in the Remarks Section relating thereto are correct to the best of my knowledge and belief and I hereby apply for a contract of automobile insurance based on the truth of this information.

I hereby authorize that reports containing credit rating, driving record information and claims history may be sought in connection with this application for insurance or renewal, extension or variation thereof.

Where

an Applicant for a contract,

(i) gives false particulars of the described automobile to be insured to the prejudice of the Insurer, or

(ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated therein; or

the Insured contravenes a term of the contract or commits a fraud; or
the Insured wilfully makes a false statement in respect of a claim under the contract, a claim by the Insured, for other than such no-fault benefits as are set out in the No-Fault Benefits Schedule, is invalid and the right of the Insured to recover indemnity is forfeited.

At the hearing, Mr. Tran translated question 10 in its entirety for Mr. Le, who was then asked whether Ms. Huong had done so. Mr. Le remembered that she had read to him the part of the question that dealt with authority to drive, but "just a little bit" about the consequences of giving false information. However, he admitted that Ms. Huong told him he had to tell the truth about the questions, and that she would send the form to the Insurer for its review.

I am satisfied that Mr. Le understood the importance of giving accurate information in response to Ms. Huong's questions.

Mr. Gillen also submitted, on the Applicant's behalf, that a misrepresentation is not "material" under section 17(3)(a) unless the insurer, knowing the truth, would not have insured the person at any price. On behalf of the Insurer, Mr. Schnarr submitted that a misrepresentation is also material if it would affect the premium.

I do not accept the Applicant's very restrictive definition of "material". A contract of insurance is a contract to insure an applicant against certain specific risks, at an agreed price. In my view, information which substantially affects the premium is material to the contract.

Dominion's written policy on voiding contracts (Exhibit 1, Tab 7) provides that "any license suspension/cancellation in the last 6 years not disclosed" "will constitute a "VOID² policy" [emphasis in original]. In his testimony, Mr. Payette stated that this policy has been filed with the Ontario Insurance Commission. Mr. Schnarr submitted, on the Insurer's behalf, that the policy attests to the materiality of Mr. Le's misrepresentation of his driving history. In my view, an insurer's policy about voiding contracts is good, but not conclusive, evidence of materiality. In this case, Mr. Payette testified that the Insurer would have charged a higher premium if it had known about the licence suspension.

Although I heard little evidence about the Insurer's underwriting and classification policies, I accept that if Mr. Le had disclosed his licence suspension, Dominion would have charged a higher premium. Accordingly, I find that Mr. Le's misrepresentation of his driving history was material. Mr. Le is precluded under section 17(3)(a) of the Schedule from claiming weekly income benefits from the Insurer.

Additional Grounds for Voiding the Policy:

Given my finding that Mr. Le's misrepresentation of his driving history was sufficient to preclude entitlement to weekly income benefits, it is not necessary for me to determine whether he knowingly and materially misrepresented his marital status and claims history.

Expenses:

The Applicant seeks an award of expenses incurred in the arbitration proceeding. An award for expenses may be made under subsection 282(11) of the Act, which provides as follows:

282(11) 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.

In Ralph McCormick and Economical Mutual Insurance Company, October 2, 1991, OIC File No. A-000139, Senior Arbitrator Susan Naylor made the following comments about expenses, with which I agree:

The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.

Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

The Director of Arbitrations approved this statement of the principles guiding an award of expenses in the appeal decision in Vito Luigi Calogero and the Cooperators General Insurance Company, February 13, 1992, OIC File No. P-000251.

On behalf of the Insurer, Mr. Schnarr submitted that the Applicant should be denied his expenses. Alternatively, the Insurer submitted that the Applicant should not be reimbursed for his airfare between British Columbia and Ontario, because the Insurer had been given no notice of his plan to move.

As has been said many times, the contract of insurance requires the utmost good faith of the insured person. I found that in applying for automobile insurance, Mr. Le knowingly misrepresented his driving history. In these circumstances, I find it appropriate to deny the Applicant his expenses.

The Insurer also took the position that the Applicant should be ordered to repay the Insurer $1,000 pursuant to subsection 282(11.2) of the Act, as amended, which provides as follows:

282(11.2) If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14.

On behalf of the Applicant, Mr. Gillen submitted that this provision does not apply to proceedings initiated before January 1, 1994. I do not accept this submission, for the reasons set out by Arbitrator Shemin Manji in George Bernicky and Guardian Insurance Company, July 6, 1994, OIC File No. A-006268.

Mr. Le has been denied his expenses, which included legal costs and airfare from British Columbia. Subsection 282(11.2) gives an arbitrator a discretionary power. In these circumstances, I do not find it appropriate to order the Applicant to pay an amount to the Insurer under this provision.

Order:

Mr. Le is precluded from receiving weekly income benefits.
Mr. Le is not entitled to his expenses incurred in the arbitration.
Mr. Le is not required to pay Dominion an amount under subsection 282(11.2) of the Act.

December 20, 1994

Nancy Makepeace

Arbitrator

Date

APPENDIX A

Exhibit 1

Exhibits Brief

Tab 1

Application for Accident Benefits, dated March 15, 1993

Tab 2

Letter to Tinh Dong Le from The Dominion of Canada General Insurance Company, dated March 30, 1993

Tab 3

Response by Insurer

Tab 4

Driving Record of Tinh Dong Le, dated January 10, 1994

Tab 5

Ontario Application for Automobile Insurance, dated March 5, 1993

Tab 6

Automobile Underwriting Inquiry, dated March 18, 1993

Tab 7

Personal Lines Automobile Underwriting Guidelines, dated Jan. 1993

Tab 8

Handwritten and transcribed statements of Tinh Dong Le, dated March 22, 1993

Tab 9

Handwritten and transcribed statements of Tina Huong, dated March 22, 1993

Tab 10

Resume of Michael Stinson

Tab 11

Section 17(3) of the No-Fault Benefits Schedule

Exhibit 2

Agent's/Broker's Copy of Tinh Dong Le's Ontario Application for Automobile Insurance, dated March 5, 1993

Exhibit 3

Ministry of Transportation documentation including:

True copy of document entitled "Notice of Suspension of Driver's Licence" dated March 30, 1990

True copy of document entitled "Licensee moved out of Ontario Province or State has returned Ont. Licence for cancellation" dated February 18, 1994

True copy of document entitled "Receipt of Driver's Licence" dated May 10, 1990

Exhibit 4

Statement of Driving Record of Le, Dong, Tinh

APPENDIX B - AUTHORITIES

Co-operative Fire & Casualty Co. v. TWA et al. (1973), 1973 CanLII 181 (SCC), 39 D.L.R. (3d) 723 (S.C.C.)

Hansra v. York Fire & Casualty Insurance Co. (1982), 1982 CanLII 2005 (ON HCJ), 38 O.R. (2d) 281 (Co.Ct.)

Moxness v. Co-operative Fire & Casualty Co. et al. (1979), 1979 CanLII 1158 (AB SCTD), 95 D.L.R. (3d) 365 (Alta.S.C.T.D.)

North American Life Assurance Co. v. Caputo (1989), 1989 CanLII 10433 (ON HCJ), 41 C.C.L.I. 104 (Ont.H.C.J.)

Footnotes

Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule-Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.
Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.

Tinh Dong Le v. The Dominion of Canada General Insurance Company, 1994 ONICDRG 120

Case Summary