Neutral Citation: 1994 ONICDRG 147

OIC A-009110 & A-009111

ONTARIO INSURANCE COMMISSION

BETWEEN:

NADINE OSBOURNE

Applicant

and

YORK FIRE & CASUALTY INSURANCE COMPANY

Insurer

And Between:

NADINE OSBOURNE

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON AN APPLICATION FOR VARIATION OR REVOCATION OF AN ORDER

Nature of Proceeding:

By Application for Variation or Revocation filed June 26, 1995, the Insurer, York Fire & Casualty Insurance Company (York Fire) seeks a revocation of my decision on a preliminary issue dated March 6, 1995, in which I ordered York Fire, rather than Allstate Insurance Company of Canada (Allstate), to pay statutory accident benefits to Nadine Osbourne. I concluded in that decision that Nadine Osbourne was an "insured person" at the time of the accident under the standard policy issued by York Fire to Winston Smart (Smart), as she was a "dependant" of Dorna Osbourne (Osbourne) who I found to be the "spouse" of Smart within the meaning of York Fire's policy.

York Fire appealed this order on April 4, 1995. Thereafter, York Fire obtained further information with respect to whether Osbourne and Smart had "cohabited continuously for a period of not less than three years" and were "spouses" at the time of the accident, and on June 26, 1995, applied to vary or revoke my order of March 6, 1995. Director's Delegate, Susan Naylor, subsequently informed the parties that the appeal filed on behalf of York Fire was considered to have been withdrawn, pending the disposition of York Fire's Application for Variation/Revocation. The Director of Arbitrations then appointed me to determine the Variation/Revocation Application pursuant to the provisions of section 284 of the Insurance Act.¹

York Fire seeks:

An order revoking or varying paragraph 1 of my decision dated March 6, 1995, in which I concluded that Dorna Osbourne was the "spouse" of its named insured Winston Smart at the time of the accident.
An order stating that Allstate, rather than York Fire, is responsible for payment of statutory accident benefits to Nadine Osbourne.
An order revoking or varying paragraph 2 of my decision dated March 6, 1995, in which I ordered York Fire to pay the expenses of Nadine Osbourne of both the preliminary issue hearing held before me and the earlier preliminary issue hearing held before Arbitrator Palmer on November 7, 1994.
An order stating that Allstate rather than York Fire must pay Nadine Osbourne's expenses of the two preliminary issue hearings.

The result is:

Paragraph 1 of my decision dated March 6, 1995, is revoked and replaced by the following paragraph:

Allstate Insurance Company of Canada (Allstate) must respond to Nadine Osbourne's claims for payment of statutory accident benefits arising from the motor vehicle accident of December 1, 1993, subject to any adjustment required between Allstate and York Fire & Casualty Insurance Company (York Fire) for statutory accident benefits previously paid pursuant to the interim order of Arbitrator Palmer dated November 18, 1994, and my decision on a preliminary issue dated March 6, 1995. Nadine Osbourne is not an insured person under section 2.2.3(e) of the standard OPF policy issued by York Fire to its insured Winston Smart. Nadine Osbourne is a "dependant" of Dorna Osbourne. However, at the time of the accident, Dorna Osbourne was not a "spouse" of York Fire's "name insured" Winston Smart, under section 2.2 of the policy or within the meaning of the definition of "spouse" under paragraph 224(1)(c) of the Insurance Act.

Paragraph 2 of my decision dated March 6, 1995, is revoked and replaced by the following paragraph:

Nadine Osbourne is entitled to payment from Allstate of her expenses of the hearing on a preliminary issue before Arbitrator Palmer held November 7, 1994, as well as the preliminary issue hearing held before me in January 1995, subject to any adjustment required between Allstate and York Fire for amounts previously paid pursuant to the interim order of Arbitrator Palmer dated November 18, 1994, and my preliminary issue decision dated March 6, 1995.

No expenses of this Application for Revocation/Variation are awarded.

Hearing:

This Application to Vary/or Revoke was held at the offices of the Ontario Insurance Commission in North York, Ontario, on August 20, 1996, before me, Janice Mackintosh, Arbitrator. Final submissions were filed on December 9, 1996. A list of those in attendance at the hearing, the exhibits filed, and other documents before the arbitrator, are contained in Appendix "A".

Background:

The Applicant, Nadine Osbourne, was almost 14 years old when she was struck by a motor vehicle after leaving her school bus on December 1, 1993. She sustained multiple injuries, including a severe head injury. At the time of the accident, Nadine was living with her mother, Dorna Osbourne, in their home on Pickering Parkway. It is agreed that Nadine was a "dependant" of her mother at the time of the accident. Nadine's father, Locksley Osbourne, was divorced from her mother in 1988. At the time of the accident, neither Dorna nor Locksley Osbourne owned a motor vehicle nor were they named insureds under any motor vehicle insurance policy.

At the time of the accident, Winston Smart had a standard Ontario Automobile Policy of Insurance (O.P.F. 1) with York Fire. He maintained a separate residence at Fieldlight Boulevard in Pickering with his daughter Wendy Smart. Smart had obtained a divorce from Wendy's mother, Winnie Duncan, in 1985. Osbourne and Smart were married on December 31, 1994, a year after Nadine Osbourne's accident.

Following the accident, Nadine Osbourne applied for statutory accident benefits payable under Ontario Regulation 672,² from Allstate, which insured the automobile that struck her, and also from York Fire, Smart's insurer. Each insurer denied coverage under the priority provisions of section 268 of the Insurance Act.

The parties were unable to resolve their disputes through mediation and Nadine Osbourne applied for arbitration under the Insurance Act. A decision on a preliminary issue, released by Arbitrator Palmer on November 18, 1994, awarded Nadine Osbourne interim benefits to be paid equally by Allstate and York Fire, pending the determination of the issue of the spousal status of Osbourne and Smart. I issued the decision on the second preliminary issue on March 6, 1995, giving rise to this application to vary or revoke my order.

The issue to be determined was described by the parties as follows: if Smart is found to be a "spouse" of Nadine's mother, Osbourne, at the date of loss, Nadine would be an "insured person" within the meaning of section 2.2.3(d) of York Fire's policy, and section 2 of the Schedule. If Smart is not a "spouse" of Osbourne at the date of loss, Allstate must respond to the claim.³ The order of priority as between these two insurers, determined under section 268 of the Insurance Act, was not an issue before me.

At the hearing of the preliminary issue in March 1995, York Fire took the position that the continuous cohabitation of Osbourne and Smart ceased when they obtained separate residences in the Spring of 1993, and that therefore at the date of the accident (December 1, 1993) Osbourne was no longer a spouse of Smart within the meaning of paragraph 224(1)(c) of the Insurance Act. Osbourne and Smart maintained that they had cohabited together continuously from August 1986, to the date of their marriage on December 31, 1994, a year following Nadine's accident, although they had maintained separate addresses for approximately 18 or 19 months (March or April 1993 to October 1994). I accepted the evidence of Osbourne and Smart and found York Fire responsible for the payment of statutory accident benefits to Nadine Osbourne.

The new documentary evidence filed by York Fire in support of this Application to Vary/or Revoke my earlier order, was obtained from the Ontario Court (General Division) concerning divorce proceedings of Winston Smart from Shirley Smart (née James). These records indicate that during the three year period preceding Nadine Osbourne's accident (December 1, 1993), Smart and Shirley James married on June 16, 1992, separated on April 15, 1993, lived apart after that date, and were divorced effective June 11, 1994.⁴

During the course of this Application to Vary/or Revoke, Osbourne admitted for the first time, that she too had married during the relevant three year period preceding the accident. York Fire subsequently filed further documentary evidence from the records of the Ontario Court (General Division) showing that Osbourne and Tennyson Bandhan married on May 4, 1991, separated on May 14, 1991, lived apart after that date, and were divorced effective March 3, 1995.⁵

If accepted at face value, these documents establish that Osbourne's and Smart's respective marriages and subsequent periods of cohabitation with other people occurred during the three year period they previously testified they were continuously cohabiting. Counsel for both Nadine Osbourne and Allstate submitted that I ought to give no weight to these documents including sworn affidavits filed by Smart and Osbourne in the Ontario Court (General Division) because they contain false statements made for the sole purpose of assisting Shirley James and Tennyson Bandhan to obtain landed immigrant status in Canada; however, they submit that I ought to rely on Smart and Osbourne's sworn testimony in the earlier proceeding to determine their spousal relationship.

The Law:

The term "spouse" is not defined within the Schedule. However, it is defined under section 5.2.4 of O.P.F. 1 and under section 224(1) of the Insurance Act, as follows:

Part IV

Automobile Insurance

Definitions

224.--(1) In this Part,

"spouse" means either of a man and a woman who,

(a) are married to each other,

(b) have together in good faith entered into a marriage, or

(c) are not married to each other and have cohabited continuously for a period of not less than three years, or have cohabited in a relationship of some permanence if they are the natural or adoptive parents of a child.

(emphasis added)

At the hearing on the preliminary issue counsel for York Fire referred to several definitions of "cohabit" and "cohabitation" as follows:

Black's Law Dictionary:

Cohabitation:

To live together as husband and wife. The mutual assumption of those marital rights, duties and obligations which are usually manifested by married people, including but not necessarily dependent on sexual relations.

Shorter Oxford Dictionary:

Cohabit:

To dwell or live together;
To live together as husband and wife.

Dictionary of Canadian Law:

Cohabit:

To live together in a conjugal relationship, whether within or outside marriage.
To live together in a family relationship. (Child and Family Services and Family Relations Act, S.N.B. 1980, c. C-2.1, s.1).

Words and Phrases Legal Maxims Canada:

Cohabit:

(Ont.) Under a separation agreement, the plaintiff's benefits were dependant upon her not "cohabiting" with a man "as though they were man and wife..." for a period of more than 45 days. Per Hutchinson, Co. Ct J.: "I draw from [the] authorities that the phrases 'cohabit', 'living arrangement', 'live with a man in a state resembling matrimony' and 'live with a person as if they were husband and wife' have common features in that these contemplate an integrated relationship between the man and the woman that will usually have many of the following elements, though not necessarily all of them: financial interdependence, a sexual relationship, a common principle residence, obligations on the part of each to share the responsibilities of running the home, shared use of assets such as cars, boats, etc., shared responsibilities for raising children, shared vacations and the expectation each day that there be continued mutual dependancy. (at p. 45) Bellis v. Innes (1980), 1980 CanLII 3813 (BC SC), 21 R.F.L. (2d) 40 (B.C. Co. Ct.)

In my previous decision, I concluded that the term "cohabited" used in the context of the definition of "spouse" in paragraph 224(1) (c) of the Insurance Act contemplates an integrated relationship between a man and a woman which usually contains the elements set out in Bellis v. Innes.⁶ While I agreed with York Fire that sharing a principal residence is a significant indicator of the intention to cohabit, I concluded that it is not the only indicator and is not, in and of itself, determinative of whether Osbourne and Smart had cohabited together continuously in the three years immediately preceding Nadine's accident.

Evidence and findings:

In my decision on the preliminary issue, I concluded that Osbourne and Smart had "cohabited continuously" for the three year period December 1, 1990 to December 1, 1993, despite the significant fact that they maintained separate residences for approximately eight or nine months preceding the accident and a further ten months after the accident. I reached this conclusion because I found many other indicators of an integrated relationship during the relevant period, including financial interdependence, a sexual relationship, obligations and expectations on the part of each to share the responsibilities of running a home, shared use of assets such as a car, shared responsibilities of raising the children Nadine and Wendy, and shared vacations. In making these findings, I relied upon the sworn testimony of Smart and Osbourne concerning intimate and highly personal aspects of their relationship. They were the only witnesses called and I had no reason to doubt their overall veracity, despite some inconsistencies in the evidence.⁷ On the whole I found their evidence to be forthright, consistent and believable. I now have reason to conclude otherwise.

Smart and Osbourne were aware that the dispute between the two insurers was whether their relationship amounted to continuous cohabitation during the three years preceding Nadine's accident.⁸ They each volunteered to attend an examination under oath on January 19, 1995, conducted by counsel for Allstate and York Fire, to assist the insurers to determine this issue. At the preliminary issue hearing before me, counsel for Nadine Osbourne made much of Smart's and Osbourne's co-operation with the insurers and attributed it to their good faith and complete neutrality as to the outcome of this dispute. The transcripts of the two separate examinations conducted on January 19, 1995, of Smart, then of Osbourne, were marked as Exhibits 3(b) and 3(c) respectively at the original hearing before me. Counsel for both insurers asked questions about the relationship between Smart and Osbourne and any other relationships either may have entered into during the relevant period. Counsel for Allstate asked Osbourne a series of questions concerning her recent marriage to Smart on December 31, 1994 (questions 130 to 138). Counsel for York Fire followed up with the next series of questions:

Q.139

You were married before, obviously. You're divorced?

Yes.

Q.140

Did you receive a divorce?

Yes.

Q.141

When did you receive your divorce papers?

In '88.

Q.142

And that was from Locksley?⁹

Yeah.

Q.143

And that was the final papers for your divorce?

Yes.

Q.144

Okay. So this is your second marriage?¹⁰

Yes.

Q.145

Is this Mr. Smart's second or third marriage?

What did he say?¹¹

Q.146

I don't know?

I can't answer that for him. You'd have to ask him.

Q.147

What's your information?

I don't think I should answer that.

Following this question, the January 19, 1995 examination of Osbourne was adjourned.

The evidence adduced at the present hearing establishes that Osbourne's marriage to Smart was, in fact, her third and not her second marriage as stated above under oath. It is also clear that she was not forthright in her answers to counsel concerning both her own and Smart's marital histories, despite her later admitting knowledge of Smart's two previous marriages.¹²

Similarly, Smart was not candid when examined by counsel for Nadine Osbourne concerning his marital status. In the course of the original preliminary hearing before me, Smart was asked if he and Osbourne had discussed or made plans about marriage during 1993. He responded that they always talked of it, but because of their bankruptcies they were waiting. He stated "...we were hoping that when everything goes over, we're going to put our lives back together, which might have happened at the end of December [1993], if everything went well. But Nadine got into an accident right away and that put a hold on everything."¹³

The new evidence adduced at this hearing establishes that neither Smart nor Osbourne were in a legal position to marry in December 1993. Smart was still married to Shirley Smart (nee James) and Osbourne was still married to Tennyson Bandhan.

In the original hearing before me, Smart denied having a relationship with someone else during the years 1985, '86, '87, '88...'90, '91, '92.¹⁴ In the present proceeding (having since learned of Smart's marriage to Shirley James), counsel for York Fire specifically asked Smart if he had ever had a relationship with Shirley James in any form. Smart responded, "Well, what kind of relationship are you talking about? We have a business relationship, we have a financial relationship..."¹⁵ From this response, I conclude that Smart understood the word "relationship" to encompass a broad range of relations and connections. Yet he made no mention of his long friendship and business association with Shirley James, culminating in their marriage in June 1992, when initially responding to the question posed in the preliminary hearing before me.

Smart subsequently explained that he had not mentioned this marriage at the first hearing because it was only a marriage of "convenience" which enabled Shirley James to avoid deportation and remain in Canada to manage his tailoring business.¹⁶ Regardless of the authenticity of this marriage, I find Smart's failure to mention it in response to Allstate's original question, evidence of a disturbing lack of candour.

A review of the sworn testimony of Smart and Osbourne from the preliminary hearing, in light of the new information provided by York Fire, leads me to conclude that neither Smart nor Osbourne were candid in the first hearing. They chose to conceal information concerning their respective marriages, to the point of lying under oath in response to certain questions.

Counsel for the Insurers suggested several possible motives for Smart's and Osbourne's dishonesty, including their emotional investment in upholding their own spousal status¹⁷ or their desire to buttress Smart's claim for damages under the provisions of the Family Law Act, in connection with a negligence action commenced on behalf of Nadine Osbourne.¹⁸ I decline to speculate and make no finding concerning their motives for lying. I conclude that Osbourne and Smart lied under oath in the course of an examination taken on January 19, 1995 and during the original hearing before me on January 30, 1995, concerning material information directly relevant to the issues in dispute.

Counsel for Nadine Osbourne and Allstate submitted that nothing turns on the dishonesty of Smart and Osbourne in connection with their marital histories and suggested that the rest of the evidence concerning their relationship remains unaltered and convincing. I do not agree. The new evidence seriously undermines their credibility and I am no longer able to rely on their evidence about their relationship. Counsel for Allstate suggested that if I harboured doubts about the evidence of Smart and Osbourne, I should rely upon the evidence of Shirley James who has "no real or perceived interest in the outcome of the arbitration at hand, nor the tort action," no "hidden agenda" and "no reason to do anything other than tell the truth."¹⁹ However, Shirley James is not in a position to corroborate the intimate and personal details concerning the relationship of Smart and Osbourne that gave rise to my original order. Now that the credibility of Smart and Osbourne has been impugned, I have no reliable basis to support a finding that they maintained their continuous cohabitation and thus remained "spouses" at the time of Nadine's accident, despite obtaining separate residences and each marrying another person during the relevant period. I must therefore conclude that at the time of the accident they were not "spouses" as defined in paragraph 224(1)(c) of the Insurance Act.

Expenses:

York Fire also seeks a revocation/variation of my March 6, 1995 order regarding expenses. In my original decision, I concluded that York Fire rather than Allstate was required to respond to the statutory accident benefit claims of Nadine Osbourne. My order for expenses followed that result. Now that I am revoking my original order, my new order for expenses will also follow the new result. Consequently, Nadine Osbourne is entitled to payment of her expenses of both preliminary issue hearings, from Allstate subject to any adjustment required between Allstate and York Fire for expenses previously paid pursuant to the interim order of Arbitrator Palmer dated November 18, 1994, and my decision on a preliminary issue dated March 6, 1995.

The present Application for Variation/Revocation however was occasioned as a result of Osbourne's and Smart's false or misleading statements in the first instance. Consequently, I make no order against either Insurer to pay Nadine Osbourne's expenses incurred in respect of York Fire's Application for Variation/Revocation.

Admissibility of fresh evidence on an Application for Variation/Revocation:

Rule 40 of the Dispute Resolution Practice Code - July 20, 1990 provides:

40.1 Where the Director or arbitrator, as the case may be, is satisfied that:

(a) there has been a material change in the circumstances of the insured;

(b) evidence not available on the arbitration or appeal has become available; or

The Director or arbitrator may,

(d) vary the order or

(e) revoke the order, and

(f) make a new order if he or she considers it advisable to do so.

40.2 An order may be prospective or retroactive.

(emphasis added)

It is conceded by all parties, that the documentation concerning the respective marriages of Smart and Osbourne was not in the possession of counsel for any of the parties or within the knowledge of either Insurer, prior to the original preliminary hearing on the "spousal" issue. However, counsel for Allstate suggests that with greater diligence and more thorough cross-examination, York Fire might have discovered this evidence, prior to the original hearing before me. However, I am not persuaded that more vigorous cross-examination would have made any difference. Osbourne lied when directly questioned about her previous marriages and Smart denied the existence of any other relationships during the relevant period. I find that counsel for both Insurers were misled on this issue by Osbourne and Smart and consequently neither insurer should be denied the opportunity to adduce further evidence on this point in support of an Application for Revocation/Variation. The new evidence had an important effect on the outcome of the disputed issue, because of the insight it provided into the unreliability of Osbourne's and Smart's sworn evidence, (irrespective of whether the two legal marriages to other people during the relevant time period were sham or genuine). Finally, I conclude that it would be unfair to deny York Fire the opportunity to adduce new, relevant evidence known only to Smart and Osbourne which they deliberately concealed. Accordingly, I am satisfied that evidence has become available that was not reasonably available on the original hearing and that the requirements of Rule 40 of the Dispute Resolution Practice Code and section 284(3) of the Insurance Act have been met.

Order:

Paragraph 1 of my decision dated March 6, 1995, is revoked and replaced by the following paragraph:

Paragraph 2 of my decision dated March 6, 1995, is revoked and replaced by the following paragraph:

No expenses of this Application for Revocation/Variation are awarded.

Janice Mackintosh

Arbitrator

Date

Appendix

Present at the Hearing:

Applicant:

Nadine Osbourne

Ms. Osbourne's

Paula Lukan

Representatives

Student-at-Law, Thomson Rogers

Joseph Pileggi

Law Clerk, Thomson Rogers

York Fire's

Raymond Watt

Representative:

Barrister and Solicitor

Dutton, Brock, MacIntyre & Collier

York Fire's

Officer:

Donna Holder

Allstate's

Marianne D. Davies

Representative:

Barrister and Solicitor

Flaherty, Dow, Elliott, Chadwick & McCarthy

Witnesses:

Winston H. Smart

Dorna Osbourne Smart

Shirley James

Exhibits:

Exhibit 1

Petition for Divorce of Winston Henry Smart and Shirley Smart, dated March 18, 1994 - Ontario Court (General Division) Action No. 57461/94;

Exhibit 2

Affidavit of Winston Henry Smart sworn April 22, 1994 - Ontario Court (General Division) Action No. 57461/94

Exhibit 3

Divorce Judgement: granted May 17, 1994 - Ontario Court (General Division) Action No. 57461/94.

Footnotes

The Insurance Act, R.S.O. 1990, c.I.8, as amended, referred to in this decision as the Insurance Act.
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 On or Between June 22, 1990 and December 31, 1993. In this decision, the term "Schedule" will be used to refer to Regulation 672.
Page 2 of submissions filed on behalf of Allstate, dated September 30, 1996.
Exhibits 1, 2 and 3.
Documents provided to York Fire by counsel for Nadine Osbourne, and filed by York Fire in connection with its further written submissions dated September 23, 1996.
Bellis v. Innes. (1980), 21 R.F.L. (2d) p 45, quoted in Words and Phrases Legal Maxims, Canada.
For example, in late December 1993, shortly after Nadine Osbourne's accident, Dorna Osbourne described herself on her application for General Welfare Assistance, as a "sole support parent" and the "head of family whose spouse is absent". On the same application, under the heading "Next of Kin - Name" she provided the name of Smart and described her relationship to him as that of a "friend". However, during the same period, she described Smart as her live in "boyfriend" and Nadine's "stepfather" when describing her family structure and living situation to Nadine's rehabilitation case manager. Exhibits 4 and 11 filed in the original preliminary issue hearing before me.
Q. 130 to 137 at pages 50 and 51 of transcript from the Revocation/Variation proceeding before me - taken August 20, 1996.
Locksley Osbourne, father of the applicant, Nadine Osbourne.
Counsel is referring to Dorna Osbourne's recent marriage to Winston Smart.
Dorna Osbourne is referring to Winston Smart who had been examined earlier that day.
Questions 308 to 316 at page 85 of the transcript from the Revocation/Variation before me, proceeding taken August 20, 1996.
Q. 79 Page 15 of transcript of arbitration proceeding before me, taken on January 30, 1995.
Q. 250 to 253, pages 49 and 50, of transcript of arbitration proceeding before me, taken on January 30, 1995.
Q. 63 at page 33 of the transcript from the Revocation/Variation proceeding before me, taken on August 20, 1996.
Q. 42 to 44, pages 28 and 29 of the transcript from the Revocation/Variation proceeding before me, taken on August 20, 1996.
Page 9 of written submissions filed on behalf of Allstate, dated September 30, 1996.
Question 139 to 154 at Pages -52 to 55 of the transcript of the Revocation/Variation proceeding before me, taken August 20, 1996.
Page 10 of the written submissions of Allstate filed September 30, 1996.

Nadine Osbourne v. York Fire & Casualty Insurance Company, 1994 ONICDRG 147

Case Summary

Nature of Proceeding:

York Fire seeks:

Hearing:

Background:

The Law:

Evidence and findings:

Expenses:

Admissibility of fresh evidence on an Application for Variation/Revocation:

Order:

Appendix

Present at the Hearing:

Exhibits:

Other Documents before me:

Footnotes