Neutral Citation: 1995 ONICDRG 145

A-009690; A-009691

ONTARIO INSURANCE COMMISSION

BETWEEN:

JOSEPH ADDAI-AGYEKUM

Applicant

and

COACHMAN INSURANCE COMPANY

Insurer

AND BETWEEN:

JOSEPH ADDAI-AGYEKUM

Applicant

and

CITADEL GENERAL INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Joseph Addai-Agyekum, was injured in a motor vehicle accident on October 21, 1993. He applied for statutory accident benefits, payable under Ontario Regulation 672¹, from the Coachman Insurance Company ("Coachman"). Coachman denied Mr. Addai-Agyekum's claim because it believed his benefits should be paid by the Citadel General Insurance Company ("Citadel"). Citadel disagreed. Eventually, the insurance companies were able to settle Mr. Addai-Agyekum's claims, but they remained unable to resolve their dispute about which Insurer should pay the benefits.

The issue in this hearing is:

1. Which Insurer is responsible for paying Mr. Addai-Agyekum's statutory accident benefits?

Result:

1. Citadel General Insurance Company is responsible for Mr. Addai-Agyekum's statutory accident benefits.

Hearing:

The hearing was held in North York on May 25, 1995, before me, K. Julaine Palmer, Arbitrator.

Present at the hearing were:

Coachman's Representative: Ivan Luxenberg, Barrister and Solicitor

Citadel's Representative: Harry Brown, Barrister and Solicitor

No witnesses testified. The parties filed an Agreed Statement of Facts. The cases referred to by the parties are set out in Schedule A to this decision.

On June 16, 1995 I forwarded to the parties the decision of Arbitrator Seife in the case of Sadegh Movahedi and State Farm Insurance Company and Sadegh Movahedi and Royal Insurance Company, June 13, 1995, OIC File No. A-006901 and A-008245 (under appeal). Submissions with respect to that case were received from Mr. Luxenberg, dated July 21, 1995 and from Mr. Brown, dated August 4, 1995.

Evidence and Findings:

Background

The salient facts of this case are set out in an Agreed Statement of Facts. At the time of the accident on October 21, 1993, Mr. Addai-Agyekum was operating a taxicab carrying passengers. He had bought this vehicle then transferred the registration to Mr. Irving Verman, who owned a taxi licence. The vehicle with its taxi licence plate was then leased back to Mr. Addai-Agyekum for his regular use. The taxi operated as part of a fleet known as Empire Taxi Inc., owned by Larry Labovitch.

The taxi fleet was insured by Coachman. The named insured under the Coachman policy was "Empire Taxi Inc. and/or Larry Labovitch." Coachman charged a flat rate premium per vehicle, the total premium being determined by the number of vehicles in the fleet and not by the identities of the drivers. Mr. Addai-Agyekum reimbursed Empire Taxi for the cost of insurance as part of his weekly payments.

Mr. Addai-Agyekum's spouse owned a 1993 Chevrolet automobile at the time her husband was injured. This car was insured by Citadel and the named insured on the policy was "Patricia Addai-Agyekum."

After the accident, Mr. Addai-Agyekum applied first to Coachman for coverage and was denied and thereafter applied to Citadel for payment of his statutory accident benefits.

Analysis

Section 268(1) of the Insurance Act requires that Ontario motor vehicle insurance policies contain mandatory statutory accident benefits, "subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule." Subsections 268(2) to (5) contain the priority rules governing which insurer should pay benefits, when an individual potentially has coverage under more than one policy.

In this case, subsections 268 (2)1.i. and ii. of the Insurance Act are the pertinent provisions:

268.--(2) The following rules apply for determining who is liable to pay no-fault benefits:

1. 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, . . .

(emphasis added)

Mr. Addai-Agyekum was the occupant of a vehicle at the time of the accident. Is he "an insured" in respect of more than one automobile? If so, then subsections 268(4) and (5) of the Insurance Act dealing with the choice of insurer may be relevant. For the reasons set out below, I conclude that Mr. Addai-Agyekum was, at the time of the accident, "an insured" under two policies - the Coachman policy insuring the taxicab and his spouse's Citadel policy insuring their family car.

When the accident occurred, Mr. Addai-Agyekum was driving the vehicle insured by Coachman. He is, thus, an insured as an "occupant" under paragraph 2.2.3(a) of the policy and section 2 of the Schedule. He is also covered by the definition of section 3(1) of the Schedule.

Mr. Addai-Agyekum was not an occupant of the automobile insured by the Citadel policy held by his spouse at the time of the accident . Nevertheless, in most accident situations Citadel would be liable to pay Mr. Addai-Agyekum's statutory accident benefits. This is because, since the 1990 automobile insurance reforms, in general, such coverage "follows the (insured) person", not the vehicle. Mr. Addai-Agyekum's accident benefit coverage is liable to be paid under the Citadel policy if he falls within the definition of an "insured person" as set out in the Schedule, in section 224 or 270 of the Insurance Act, or in paragraph 2.2.3 of the policy.

Paragraph 2.2.3(c) of the policy reads as follows:

"insured person", in respect of this Policy, means, ...

....(c) the named insured, his or her spouse and any dependant of either of them while the occupant of any other automobile . . .

This accords exactly with the definition of "insured person" found in section 2 of the Schedule:

"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,"

(emphasis added)

The phrase "any other automobile" is not defined in the Schedule. It is, however, defined in paragraph 5.2.2 of the policy. That paragraph provides that such an automobile must (usually) be less than 4,500 kg in weight, that the insured and his spouse are not driving the automobile in connection with an automobile repair, storage or parking business, and notably for this case, that "the other automobile is not used for carrying passengers for compensation or hire or for commercial delivery at the time of the loss."

The entire paragraph reads as follows:

5.2.2 "the automobile", except where otherwise stated, means: ...

For the purposes of Parts A (Third Party Liability), B (Accident Benefits) and D (Uninsured Automobile Coverage): . . .

(iv) any OTHER AUTOMOBILE: other than the described automobile, which is of a gross vehicle weight of 4,500 kilograms or less, while personally driven by the insured or by his or her spouse if residing in the same dwelling premises as the insured, provided that

(a) the described automobile is of a gross vehicle weight of 4,500 kilograms or less;

(b) the insured is an individual or are spouses of each other;

(c) neither the insured nor his or her spouse is driving the automobile in connection with the business of selling, repairing, maintaining, servicing, storing or parking automobiles;

(d) EXCEPT for the purposes of Part B (Accident Benefits) the other automobile is not owned or regularly used by the insured or by any person residing in the same dwelling premises as the insured; EXCEPT THAT for the purposes of Parts A (Third Party Liability) and D (Uninsured Automobile Coverage), this exclusion does not apply if the named insured under this Policy personally drives the other automobile while being an excluded driver under the Policy of that automobile;

(e) EXCEPT for the purposes of Part B (Accident Benefits), the other automobile is not owned, hired or leased by an employer of the insured or by an employer of any person residing in the same dwelling premises as the insured; EXCEPT THAT for the purposes of Parts A (Third Party Liability) and D (Uninsured Automobile Coverage), this exclusion does not apply if the named insured under this Policy personally drives the other automobile while being an excluded driver under the Policy of that automobile;

(f)(f) the other automobile is not used for carrying passengers for compensation or hire or for commercial delivery at the time of the loss;

(Emphasis in original, italics added)

At the time of this accident, that is just what Mr. Addai-Agyekum was doing: driving a taxicab, carrying passengers for hire. Accordingly, then, it would seem to follow that he is precluded from looking to his spouse's insurance policy for statutory accident benefits.

The exclusion relating to taxicabs is further clarified in paragraph 5.12 of the policy. That paragraph explains what falls under the term "carrying passengers for compensation or hire" by excluding five common situations, like transporting someone who shares the cost of the trip.

These exclusions are specifically contemplated by the Insurance Act, which provides:

250.--(1) The insurer may provide under a contract evidenced by a motor vehicle liability policy, in one or more of the following cases, that, except as provided in the Statutory Accident Benefits Schedule, it shall not be liable while, ...

(c) the automobile is used as a taxicab, public omnibus, livery, jitney or sightseeing conveyance or for carrying passengers for compensation or hire:

(Emphasis added)

Section 250(4) enumerates the five common cases, as set out in the policy at paragraph 5.12, which are not considered the carrying of passengers for compensation.

The opening clause of section 250(1) notes that the insurer may provide such exclusions in the policy, "except as provided in the Statutory Accident Benefits Schedule". Nowhere in the Statutory Accident Benefits Schedule are any such exceptions set out. The section of the Schedule where such an exception would be most likely to be found is section 5, which is captioned "Application Despite Certain Provisions of Insurance Act" and refers to several sections of the Act.² That section does not refer to an exclusion under section 250(1)(c) for the use as a taxi. In fact, if the exclusions of paragraph 5.2.2 (f) of the policy had not been intended to apply to statutory accident benefits, the language would have been modified, with the words "Except for the purposes of Part B (Accident Benefits)" as have the provisions of paragraph 5.2.2 (d) and (e) which begin with these words.

In my view, it would be logical and fair to interpret the policy exclusions in the Citadel policy so that the Insurer which offered the taxicab policy (Coachman) must pay this Applicant's statutory accident benefits. Part of the cost of a taxicab policy of insurance is the cost of accident benefits -for a commercial vehicle on the road up to 24 hours per day. It seems illogical for a private passenger car insurer, who cannot ask Mrs. Addai-Agyekum what her spouse does for a living, to bear the cost of Mr. Addai-Agyekum's accident benefits when he is driving a taxi.

Yet, unfortunately a distinct conflict exists between the language defining "insured person" of section 2 of the Schedule (and paragraph 2.2.3 of the policy) and the exclusions in the policy for "any other automobile." If my analysis is correct, for Mr. Addai-Agyekum (or his wife) to be an " insured person" under the Citadel policy while travelling in another automobile, under the policy wording of paragraph 5.2.2(iv) they must also be "personally driving" the other vehicle. That is what the plain wording of paragraph 5.2.2(iv) says. Dependants are not even mentioned and the description of spouse is confined to someone "if residing in the same dwelling premises as the insured," contrary to the definition of section 224(1) of the Insurance Act. This policy language is far more restrictive than the language of section 2 of the Schedule and paragraph 2.2.3 of the policy where "insured person" is defined:

"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,"

The language of paragraph 5.2.2 of the policy is reminiscent of the language of the policy which predated the Schedule, which referred to "any automobile of the private passenger or station wagon type...while personally driven by the insured, or by his or her spouse if residing in the same dwelling premises as the insured".³

It is true that at the time of this accident, Mr. Addai-Agyekum was driving the other automobile, but that is not the important point. What is important is the conflict in the language. If Mr. Addai-Agyekum and his wife and dependant are travelling as passengers in another friend's car, we expect their accident benefits to be paid by Citadel, following the definition of "insured person" of section 2 of the Schedule and paragraph 2.2.3 of the policy. We would not expect the insurer to attempt to invoke the definition of paragraph 5.2.2(iv) to attempt to avoid payment.

The O.P.F. 1 is a standard form policy contract approved by the Commissioner under section 227(5) of the Insurance Act. Section 227(5) says the policy's provisions must be "in conformity with this Part" of the Act, relating to Automobile Insurance. In addition, section 268(1) of the Act requires that the policy provide accident benefits as set out in the Schedule "subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule". Accordingly, in the event of a restriction in the policy language that is inconsistent with the Schedule, the provisions in the Schedule must prevail. I can do no more than to quote Arbitrator Seife in his decision in Sadegh Movahedi and State Farm Insurance Company and Sadegh Movahedi and Royal Insurance Company, June 13, 1995, OIC File Nos. A-006901 and A-008245, when he stated:

"Any other automobile" is not defined in the Schedule. In my view, the words "any other automobile" in both the policy and the Schedule must be read in their entire context, in their plain and ordinary sense and must be understood to refer to any motor vehicle other than "the automobile" (under the policy) or the "insured automobile", (under the Schedule).

Considering the structure and wording of the definitions of "insured" in the Act, and "insured person" in the Schedule and the policy, and given the relationship described above between the Act, the Schedule, and standard policy, I find a named insured who is involved in an accident while an occupant of any automobile, is an "insured" under the particular policy in which he/she is a named insured.

Paragraph 5.2.2 of the policy "Automobile defined", particularly (iv) "any other automobile" is a maze of confusion for anyone attempting to ascertain the meaning of the exceptions to the exceptions outlined there. The problem may have arisen in borrowing language from the previous "Schedule C" to the Insurance Act, R.S.O. 1980, c.218, where the "insured person" definition made reference to similar exclusions.

In this case, I find that the inconsistency between the definition of "insured person" in both paragraph 2.2.3(c) of the Citadel policy and section 2(c) of the Schedule and the coverage of occupants of "any other automobile" afforded by paragraph 5.2.2.(f) of the Citadel policy, must be resolved by adhering to the provisions of the Schedule, following the language of section 268(1) and 227(5) of the Insurance Act. This means the exclusions in the definition of "any other automobile" in the policy, at least with respect to statutory accident benefits, must fail and Mr. Addai-Agyekum is an "insured person" under both the Citadel and Coachman policies.

In my view, the result in this case is anomalous. Other arbitrators have pointed to other inconsistencies between the language of the Schedule and the policy. Arbitrator Mackintosh has found that section 227(2) of the Insurance Act operates to provide benefits in a situation where a discrepancy existed between the policy wording and the Schedule.⁴

Nevertheless, in this case, I am reluctant to believe that the result is completely unintended, given the language of the definition of "insured automobile" in the Schedule. Insured automobile is defined there by direct reference to the language of the policy.

"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;

(emphasis added)

No reference is made in that definition to "any other automobile" of paragraph 5.2.2 of the policy. The incorporation by reference could easily have been made.

I also agree with Arbitrator Seife's comments, in the Movahedi case, with respect to the effect of section 250(1) compared with paragraph 5.12(c) of the policy.⁵

Having concluded that Mr. Addai-Agyekum is an "insured person" under both the Coachman and Citadel policies, I must consider the application of sections 268(4) and (5) of the Insurance Act in the case.

268--(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 Statutory Accident Benefits Schedule, of a named insured, the person shall claim statutory accident benefits against the insurer under that policy and if there is more than one such policy, the person, in his or her discretion, may decided the insurer from which he or she will claim the benefits.

In this case, Mr. Addai is the spouse of a named insured under the Citadel policy. He must, thus, claim his statutory accident benefits from Citadel, unless he is a spouse, dependant or named insured under more than one policy, in which case, he may decide the insurer from which he will claim.

Is he a named insured (or spouse or dependant) under more than one policy? According to the agreed facts in this case, the named insured under the Coachman policy was "Empire Taxi Inc. and/or Larry Labovitch", the fleet operator. Joseph Addai-Agyekum was not a named insured under the Coachman policy.

However, Mr. Addai did rent the vehicle in a lease-back arrangement. I must, thus, consider the provisions of section 3(1) of the Schedule, which speaks to the situation of automobiles made available for the regular use of an individual and rental vehicles. Section 3(1) provides:

3.-(1) 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 Regulation applies to the individual and his or her spouse and their dependants as if the individual were a named insured.

Cogent interpretations of the effect of this section on priority of payments are set out in the Sittler⁶ decision of Arbitrator Makepeace, the Portch⁷ decision of Arbitrator Draper and the decision of Justice Roberts in AXA Home Insurance v. Western Assurance.⁸

I am attracted by the analysis offered by Arbitrator Makepeace in Sittler. Had the Schedule provided a definition of "any other automobile" in terms identical to that of the policy, I would also have concluded here that the Insurer of the taxicab was liable to pay Mr. Addai-Agyekum's statutory accident benefits.

However, with some reluctance, I concur with those who have found that the determination of priorities is a separate issue from entitlement to benefits. Section 3(1) extends coverage for accident benefits to those for whom a vehicle is regularly made available and to those who rent vehicles. It does not follow, necessarily, however, that the coverage section 3(1) extends reaches back to section 268(5) of the Act to the setting of priorities. Only the provisions of the Schedule are deemed to apply as if the individual were a named insured. Accordingly, in my view, section 3(1) of the Schedule applies only to entitlement to benefits.

Mr. Addai-Agyekum is, thus, an insured person to Coachman by virtue of his occupancy of the vehicle in which he was riding at the time of the accident and by virtue of the operation of section 3(1) of the Schedule. He is also the spouse of a named insured with respect to the Citadel policy and must claim his accident benefits from Citadel, according to the provisions of section 268(5).

I cannot leave this decision without expressing some discomfort with the result. That an insurer of private passenger automobiles must intuitively provide in its underwriting for the percentage of insureds who themselves, or their spouses, or dependants are or will become taxicab drivers appears illogical. This situation shifts the burden of payment of accident benefits for such drivers to the insurers of private passenger automobiles, where such drivers have a family vehicle. This is so, even where such an insurer does not offer taxicab fleet coverage itself. Although the scheme of the 1990 reforms shifted the focus from the vehicle to the "portability" of the insurance to the person, it would appear that the ability of the insurer to underwrite the actual risk is substantially impaired by the limited nature of the inquiries it can make at the inception of the policy, and from time to time. By the provisions of section 17(3)(a) of the Schedule an insurer may deny weekly income benefits coverage to a person for failure to notify the insurer of a change in the risk material to the contract, yet the same insurer may not ask about occupations of family members. Further, it would appear no discount of accident benefit premium is allowed to taxicab drivers who have private passenger coverage elsewhere. Similar concerns about overlapping payment of accident benefit premium have been voiced with respect to those who have collateral coverage for supplementary medical and rehabilitation benefits and loss of income, through private disability policies or group policies through their employment.

Expenses

As the dispute with the Applicant has been settled and this hearing was required to determine priority between Insurers only, under the provisions of section 282(11) of the Act, there is no basis to award expenses to any party.

Order:

1. The Citadel General Insurance Company is responsible for Mr. Addai-Agyekum's statutory accident benefits.

October 13, 1995

K. Julaine Palmer Arbitrator

SCHEDULE "A"

Axa Home Insurance Co. v. Western Assurance Co. [1994] O.J. No. 281

D. Cattrysse and Westminster Mutual Fire Insurance Company and Anglo Canada General Insurance Company, June 21, 1993, OIC File Nos. A-001618 and A-001789

Consolidated Bathurst Export Ltd. v. Mutual Boiler and Machinery Ins. Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888

Dia v. Gore Mutual Insurance Co. et al (1993), 1993 CanLII 8511 (ON CTGD), 12 O.R. (3d) 637 (O.C.G.D.)

Re John Doe (1993) 1993 CanLII 3388 (ON CTGDDC), 13 O.R. (3d) 767 (Div. Ct.)

Insurance Act, R.S.O. 1990, c.I.8, as amended

Insurance Policy - Part E, General Provisions, Definitions and Exclusions

Sadegh Movahedi and State Farm Insurance Company and Royal Insurance Company, June 13, 1995, OIC File Nos. A-006901 and A-008245

July v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R. (2d) 129 (C.A.) for MacKinnon A.C.T.O. at p. 135

Brian C. Portch and Markel Insurance Company of Canada and Royal Insurance Company of Canada, April 19, 1995, OIC File No. A-007701 and A-008360

Statutory Accident Benefits Schedule - Accidents Before January 1, 1994

Statutory Accident Benefits Schedule - Accidents On or After January 1, 1994

Timothy J.P. Ready and Progressive Casualty Insurance Company and Zurich Insurance Company, May 12, 1994, OIC File Nos. A-005403 and A-004768

Dorothy Sittler and Canadian General Insurance Company and Pilot Insurance Company, December 3, 1992, OIC File Nos. A-000951 and A-004495

Dani Tripone and Guardian Insurance Company and Liberty Mutual Fire Insurance Company, May 16, 1994, OIC File No. A-004757

"Subject to section 17 [which notes further exclusions], the insurer will pay the benefits under this Schedule despite section 225, subsection 233(1), section 240, subsection 265(3) and Statutory Condition 1(1) of [section 234](https://www.canlii.org/en/on/laws/stat/rso-1990-c-i8/latest/rso-1990-c-i8.html#sec234_smooth) of the [Insurance Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-i8/latest/rso-1990-c-i8.html).'

There is no provision in the Schedule equivalent to that found in section 5.12(c) of the policy.

It appears to me that the likely source of section 5.12(c) of the policy is section 250(1)(c) of the Act which states:

250.-(1) The insurer may provide under a contract evidenced by a motor vehicle liability policy, in one or more of the following cases, that, except as provided in the Statutory Accident Benefits Schedule, it shall not be liable while,

(c) the automobile is used as a taxicab, public omnibus, livery, jitney, or sightseeing conveyance or for carrying passengers for compensation or hire.

[emphasis added].

Section 5.12(c) of the policy is different from the above only in one respect. It does not incorporate the exception in 250(1)(c) of the Act. The standard policy is subsidiary to the provisions of the Act. In my view, the drafters of the policy could not have intended to override the provisions of the Act by providing for exclusions from entitlement to statutory accident benefits that are not sanctioned under the Act or the Schedule.

Accordingly, I find that section 5.12(c) is not applicable in the circumstances of this case.

Footnotes

1. 1Prior 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.
2. 2Section 5 of the Schedule reads as follows:
3. 3See "5. Automobile Defined", (d) under the General Provisions, Definitions, and Exclusions of S.P.F. No. 1 (at page 11)
4. 4See Arbitrator Mackintosh's decision in Alice M.E. Miron and Old Republic Insurance Company, November 23, 1994, OIC File No. A-7825.
5. 5At page 11, Arbitrator Seife wrote:
6. 6Dorothy Sittler and Canadian General Insurance Company and Dorothy Sittler and Pilot Insurance Company, December 3, 1993, OIC File Nos. A-000951 and A-004495.
7. 7Brian C. Portch and Markel Insurance Company and Brian C. Portch and Royal Insurance Company, March 20, 1995, OIC File Nos. A-007701 and A-008360.
8. 8Axa Home Insurance v. Western Assurance, [1994] I.L.R. ¶1-3033 (Ont. Ct. Gen.Div.)