Neutral Citation: 1995 ONICDRG 146

File No.: A-009908

ONTARIO INSURANCE COMMISSION

BETWEEN:

ROBERT EDWARD CROSBIE SR.

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

File No.: A-012239

AND BETWEEN:

ROBERT EDWARD CROSBIE SR.

Applicant

and

PILOT INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Issues:

The Applicant, Robert Edward Crosbie Sr., was injured in a motor vehicle accident on January 28, 1994. Following this accident, he applied to Co-operators General Insurance Company ("Co-operators"), the Insurer of the vehicle which struck him, for statutory accident benefits payable under the Schedule¹. Co-operators denied the Applicant's claim, maintaining that the Applicant should look to Pilot Insurance Company ("Pilot") for payment of statutory accident benefits. Pilot was the Insurer of a policy of automobile insurance in which the Applicant's spouse was the named policyholder. Pilot also refused coverage.

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

The preliminary issue to be determined in these arbitration proceedings is:

1. Which insurance company, Pilot or Co-operators, is responsible for paying any statutory accident benefits to which the Applicant may be entitled?

Result:

1. Pilot is the insurance company which is responsible for paying any statutory accident benefits to which the Applicant may be entitled.

Hearing:

The hearing on the preliminary issue was held in North York, Ontario, on September 27, 1995, before me, Lawrence Blackman, Arbitrator.

Present at the Hearing:

Co-operator's Representative: Mr. Stephen M. Malach Barrister and Solicitor

Co-operator's Officer: Ms. Vera Babiy

Pilot's Representative: Mr. Grant E. Black Barrister and Solicitor

Ms. Grace Pang, Barrister and Solicitor, briefly attended, on behalf of Pilot.

The Applicant, and his counsel, Mr. David Longley, were present prior to the commencement of the hearing, at which time all of the parties to these proceedings agreed on the facts pertinent to this preliminary hearing. The Applicant and his counsel left the hearing room before submissions were made on behalf of the insurance companies.

No witnesses testified, nor were any exhibits entered at this preliminary hearing.

Briefs of Authorities and Memoranda of Law were filed on behalf of the insurance companies. The cases referred to by the parties are set out in Schedule "A" to this decision.

Evidence and Findings:

Background Facts:

The preliminary issue for determination in this case, is which Insurer is responsible for paying this Applicant the benefits to which he may be entitled.

The facts germane to this preliminary hearing, as agreed by the parties, are as follows.

The motor vehicle accident giving rise to these proceedings took place on January 28, 1994.

At that time the Applicant was standing beside a tow truck. Another vehicle collided with the tow truck, causing the tow truck to strike the Applicant. The parties agreed, that at the time of this accident, the Applicant was a pedestrian. I find, on the facts as presented to me, that the Applicant does not come within the expanded definition of occupant under section 224(1) of the Act, but was at all material times a "non-occupant," to use the parlance of the Act.

It was further agreed that the tow truck was made available for the regular use of the Applicant.

At the time of the accident, the tow truck was owned by, and registered under the name of Prochilo Brothers Auto Collision Ltd., and was insured by Co-operators pursuant to policy no. GA1156612. This policy of insurance was an automobile fleet policy. The Applicant was listed as the driver of this particular tow truck, but was not a named insured on this policy. The named insureds under Co-operators' policy were Prochilo Brothers Auto Collision Ltd., Toryork Auto Rentals, and Union Towing Ltd. Co-operators had specifically assessed the driving record and the risk of the Applicant, in determining its premium.

At the time of the accident, the Applicant's spouse, Susan Crosbie, was the named insured under automobile insurance policy no. A1300939 issued by Pilot.

Following this accident, the Applicant first applied to Co-operators for payment of statutory accident benefits, and was denied. The Applicant then applied to Pilot for coverage, and was also denied.

The Law:

Part VI of the Act governs automobile insurance.

Section 88(2) of the Schedule states that benefits payable under this Regulation in respect of an insured person, shall be paid by the insurer who is liable to pay under section 268(2) of the Act. Section 268(2) therefore sets out the priority hierarchy in determining which insurer is liable for the payment of statutory accident benefits.

The parties have agreed, and I have found, that the Applicant was a "non-occupant" of an automobile at the time of this accident. The priority rules pertaining to a "non-occupant" are found at section 268(2)(2) of the Act, which states:

(2) The following rules apply for determining who is liable to pay statutory accident benefits:

2. In respect of non-occupants,

i. the non-occupant has recourse against the insurer of an automobile in respect of which the non-occupant is an insured,

ii. if recovery is unavailable under subparagraph i, the non-occupant has recourse against the insurer of the automobile that struck the non-occupant,

(Emphasis added)

The parties agree, and I find, that the Applicant was "an insured" pursuant to section 268(2)(2)(i) of the Act, in respect of the automobiles insured by both Co-operators and Pilot. The reason for this is section 224(1) of the Act, which expands the definition of "insured" to specifically include persons entitled to statutory benefits, whether "named or not". Section 224(1) states:

"insured" means a person insured by a contract whether named or not and includes every person who is entitled to statutory accident benefits under the contract whether or not described therein as an insured person; (emphasis added)

"Statutory accident benefits" are defined in that same section as those benefits set out in the Schedule. The words "insured person" are defined in section 1 of the Schedule, the relevant portion of which is as follows:

"insured person", in respect of a particular motor vehicle liability policy, means,

(a) the named insured, any person specified in the policy as a driver of the insured automobile, the spouse of the named insured, and any dependant of the named insured or spouse, if the named insured, specified driver, spouse or dependant,

(i) is involved in an accident in or outside of Ontario that involves the insured automobile or another automobile,

(Emphasis added)

The Applicant, as the spouse of the named insured, Susan Crosbie, is thus "an insured person" under the Pilot policy, pursuant the Schedule. Hence, he is, by virtue of section 224(1) of the Act, an "insured person" under the Act. Therefore, Mr. Crosbie is an "insured" for priority purposes (by reason of section 268(2) of the Act) under the Pilot policy.

The Applicant is likewise "an insured" for priority purposes under Co-operators' policy as he is a "person specified in the policy as a driver of the insured automobile" pursuant to the Schedule, and hence also the Act.

At this point, therefore, Pilot and Co-operators are at the same level. There is however a higher rung in the priority pyramid.

The Act states in section 268(4), that if a "non-occupant" has recourse against more than one insurer of an automobile in respect of which the non-occupant is an insured, then the non-occupant has "absolute discretion" to decide the insurer from which to chose benefits. However, section 268(5) of the Act puts a restriction on this exercise of discretion, if the "non-occupant" is a "named insured" (to use the terminology of the Act), spouse or a dependant of a "named insured." This provision reads as follows:

(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.

The parties agree, and I find, that the Applicant is the spouse of a named insured under the Pilot policy of insurance. Therefore Pilot would be responsible for the payment of any statutory accident benefits to which the Applicant may be entitled, unless the Applicant is also found to be a "named insured" under the Co-operators policy of insurance.

The parties further agreed that under Co-operators' policy, Prochilo Brothers Auto Collision Ltd., Toryork Auto Rentals, and Union Towing Ltd. are the "named insureds," and that the Applicant is not a named insured merely by being referred to in that policy of insurance.

I agree with this position. In so doing I adopt the reasoning of Arbitrator Renahan in Sarah L. Fisher and Pilot Insurance Company, Sarah L. Fisher and State Farm Mutual Automobile Insurance Company, July 17, 1995, OIC File Nos. A-010819 and A-010820, who held that although an Applicant may be referred to in a policy, that person is not "named" in the sense of being the named policyholder who entered into the contract with the insurer.

Counsel for Pilot however argues that the words "named insured" as used in section 268(5) of the Act, are expanded by reference to other provisions of both the Act and the Schedule, so as to include this Applicant in the higher level of the priority hierarchy. Firstly, counsel notes the references to "insured" in both section 224(1) of the Act set out above, and section 270 of the Act, which states:

270. 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. R.S.O. 1990, c. I.8, s. 270.

I find, however, that these provisions do not expand the meaning of "named insured" under section 268(5) of the Act. Section 224(1) expands the meaning of the word "insured," not "named insured," to specifically encompass the Schedule definition of that word. I find that the purpose of that section, and section 270, is to provide equality of entitlement and equality in the right to recovery by insured persons, whether named as policyholders under the policy (and therefore a party to the contract with the Insurer) or not named (and therefore not being a party). Section 265 of the Act as an example provides that every contract evidenced by a motor vehicle liability policy shall provide for uninsured or unidentified automobile coverage. Section 268(1) states that every such contract shall provide statutory accident benefits as set out in the Schedule. Those sections allow an individual who is not a party to the insurance contract to take action and to recover from insurers as if such individuals were parties to the contract of insurance.

I find that section 268(5) however, specifically sets out, for the purpose of the priority rules only, a "higher" and distinct class of insured, that is, the "named insured."

Counsel for Pilot however further submits that provisions in the Schedule, in conjunction with sections 224(1) and 270 of the Act, expand the meaning of "named insured" to include this particular Applicant. Counsel relies upon the decision of Arbitrator Makepeace in Dorothy Sittler and Canadian General Insurance Company; Dorothy Sittler and Pilot Insurance Company, December 3, 1993, OIC File Nos. A-000951 and A-004495, where she held that:

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.

Arbitrator Makepeace's notation of subsection 3(1) refers to the predecessor of the present Schedule, which was the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 (the "SABS"). The relevant portions of section 3(1) of the SABS state as follows:

If the insured automobile is made available for the regular use of an individual . . . by a corporation . . . this Regulation applies to the individual . . . as if the individual were a named insured.

This provision is now found in section 91 of the Schedule. The pertinent portions of subsection 91(1), which applies to this case, are as follow:

. . . if an insured automobile is made available for the regular use of an individual who is living and ordinarily present in Ontario by a corporation . . . the individual shall be deemed for the purpose of this Regulation to be the named insured.

(Emphasis added)

This subsection applies in respect of accidents which occurred between January 1, 1994 and January 1, 1995. If this accident had taken place on or after January 1, 1995, section 91(4) would apply. I shall however deal only with the factual situation before me.

I disagree with Pilot's counsel that section 91(1) expands the meaning of "named insured" as found in subsection 268(5) of the Act.

Firstly, in accordance with the maxim expressio unius est exclusio alterius (the expression of one thing is the exclusion of another), I find that the Schedule, by specifying that the expansive meaning of "named insured" is "for the purpose of this Regulation," excludes broadening the meaning of "named insured" for the purposes of the priority rules, which are set out in the Act, not in the regulation.

Secondly, whereas section 224(1) of the Act specifically expands the definition of "insured" in the Act by reference to the Schedule, there is no similar section in the Act expanding the words "named insured" by reference to the subordinate legislation of the Schedule. The Schedule, by itself, is restricted, because of section 121(1)(9) of the Act, to establishing benefits that must be provided under contracts evidenced by motor vehicle liability policies and establishing "terms, conditions, provisions, exclusions and limits" related to such benefits. Hence, section 88(1) of the Schedule, states that it is the Schedule which determines what benefits shall be provided under every contract of automobile insurance.

The Schedule, in section 88(2) however specifically confirms that the question of which insurer is liable to pay shall be determined under section 268(2) of the Act.

I therefore find that the term "named insured" under section 268(5) of the Act is not expanded by section 91(1) of the Schedule. Accordingly, the Applicant is not a "named insured" for priority purposes, under the Co-operators policy. I have found that the Applicant is the spouse of a named insured under the Pilot policy of automobile insurance. Therefore, Pilot is the Insurer responsible for payment of any benefits to which the Applicant may be entitled.

I acknowledge that this result can be seen as inconsistent with common sense, in that the Insurer (Co-operators) which assessed the risk of the Applicant cannot be looked to for payment of accident benefits. I therefore have sympathy for the approach taken by Arbitrator Makepeace in the Sittler decision, which would allow the Applicant to look to the Insurer which assessed his individual risk.

I note however, that Arbitrator Makepeace was dealing with different regulatory wording than is applicable in this case. I also note that even if I were to adopt the reasoning of the Sittler decision, and deem the Applicant to be a named insured under the Co-operators policy, the Applicant would still have the discretion (pursuant to section 268(5.1) of the Act) to look to Pilot instead of Co-operators, for payment of benefits.

Arbitrators Draper and Seife have commented on the reason as to this apparent inconsistency². I agree with their rationale that "the principle behind the statutory accident benefits scheme is that the coverage follows the insured person who looks first to his or her own insurance company, whether or not his or her vehicle is the one involved in the accident." Simply put, as a general maxim, coverage follows the person, not the vehicle.

Expenses:

Under the provisions of section 282(11) of the Act, there is no basis upon which to award expenses to either Insurer. I reserve to the main hearing of these arbitration proceedings, the issue of expenses of this preliminary hearing, to the Applicant.

Special Award:

The Applicant seeks a special award pursuant to section 282(10) of the Act, on the basis "that an insurer has unreasonably withheld or delayed payments."

I am prepared to hear submissions in the main hearing as to whether the Applicant is entitled to a special award against either or both of the Insurers.

Order:

1. Pilot is the insurance company which is responsible for paying any statutory benefits to which the Applicant may be entitled.

October 16, 1995

Lawrence Blackman Arbitrator

Date

SCHEDULE A - AUTHORITIES

1. Axa Home Insurance Company v. Western Assurance Company (unreported reasons of The Honourable Mr. Justice Roberts, released on February 16, 1994)

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

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

4. Sarah L. Fisher and Pilot Insurance Company, Sarah L. Fisher and State Farm Mutual Automobile Insurance Company, July 17, 1995, OIC File Nos. A-010819 and A-010820

5. July et al. v. Neal et al. (1986), 1986 CanLII 149 (ON CA), 19 C.C.L.I. 230, (1986), 57, O.R. (2d) 129 (C.A.)

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

7. Brian C. Portch and Markel Insurance Company of Canada, Brian C. Portch and Royal Insurance Company of Canada, March 20, 1995, OIC File Nos. A-007701 and A-008360

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

9. Dorothy Sittler and Canadian General Insurance Company, Dorothy Sittler and Pilot Insurance Company, December 3, 1993, OIC File Nos. A-000951 and A-004495

10. Dorothy Sittler and Canadian General Insurance Company, Dorothy Sittler and Pilot Insurance Company, August 11, 1995, OIC File Nos. P-000951 and V-000951

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

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after January 1, 1994, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93.
2. 2Brian C. Portch and Markel Insurance Company of Canada, Brian C. Portch and Royal Insurance Company of Canada, March 20, 1995, OIC File Nos. A-007701 and A-008360, and Sadegh Movahedi and State Farm Mutual Automobile Insurance Company, Sadegh Movahedi and Royal Insurance Company of Canada, June 13, 1995, OIC File Nos. A-006901 and A-008245, at page 16.