Neutral Citation: 1996 ONICDRG 1

File No.: A-009580

ONTARIO INSURANCE COMMISSION

BETWEEN:

AGYEINIM BOATENG

Applicant

and

COACHMAN INSURANCE COMPANY

Insurer

File No.: A-009571

AND BETWEEN:

AGYEINIM BOATENG

Applicant

and

PROGRESSIVE CASUALTY INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues:

The Applicant, Agyeinim Boateng, was injured in a motor vehicle accident on May 14, 1992. He applied for statutory accident benefits, payable under Ontario Regulation 672¹, from both the Coachman Insurance Company ("Coachman") and the Progressive Casualty Insurance Company of Canada ("Progressive"). Coachman is the Insurer of the taxi driven by Mr. Boateng at the time of the accident. Progressive is the Insurer of Mr. Boateng's personal automobile. Each Insurer claimed that the other was responsible for paying the statutory accident benefits to which Mr. Boateng might be entitled. The parties were unable to resolve their disputes through mediation and Mr. Boateng applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act"). The Insurers have since agreed, as an interim measure, to each pay 50% of Mr. Boateng's statutory accident benefits. The only issue remaining at this time is which of the Insurers is responsible for covering Mr. Boateng's claims. Mr. Boateng and his counsel did not participate in the hearing of this matter.

The issue in this hearing is:

1. Which Insurer is responsible for paying Mr. Boateng's statutory accident benefits?

Result:

1. Progressive is responsible for paying Mr. Boateng's statutory accident benefits.

Hearing:

The hearing was held in North York, Ontario, on October 2, 1995.

Present at the Hearing:

Coachman's

Ivan Luxenberg

Representative:

Barrister and Solicitor

Progressive's

Mark Wilson

Representative:

Barrister and Solicitor

Progressive's

Rama Govindarajoo

Officer:

Accident Benefits Specialist

There were no witnesses called at the hearing. The matter proceeded on the basis of an agreed statement of fact. One additional document was admitted into evidence: a letter dated October 2, 1995 from the claims department of Coachman to Mr. Luxenberg concerning the use of taxi cabs by Mr. Boateng from February to May, 1992. Various other materials, as outlined in the Appendix, were submitted by Mr. Luxenberg.

Facts:

The agreed statement of fact is reproduced as follows:

1. The Applicant was involved in a motor vehicle accident which occurred on or about May 14, 1992.

2. At the time of the subject accident, the Applicant was operating a taxi which was owned by Active Taxi and was insured by Coachman Insurance Company under Policy No. 001316. There was a paying passenger in the taxi at the time of the accident.

3. At the time of the subject accident, the Applicant was not a named insured under the Coachman Insurance Company policy on the said taxi.

4. At the time of the subject accident, the Applicant was the owner of a 1981 Volvo motor vehicle which was insured by Progressive Casualty Insurance Company of Canada under Policy No. 2060654-0.

5. At the time of the subject accident, the Applicant was a named insured under the Progressive Casualty Insurance Company of Canada policy on his Volvo motor vehicle.

6. At the time of the subject accident, the Applicant was not a scheduled driver under the Coachman Insurance Company policy.

Submissions:

Coachman's Position:

The dispute between the Insurers concerns whether Mr. Boateng's personal Insurer, Progressive, or the Insurer of the taxicab fleet, Coachman, is liable to pay Mr. Boateng's statutory accident benefits. Counsel for Coachman, Mr. Luxenberg, submitted that the applicable legislation, read in its normal and ordinary sense, requires insureds to look to their own insurer first, notwithstanding that this may work an unfairness on insurers in some cases. Mr. Luxenberg urged me to follow the cases of Portch and Movahedi², both of which find that personal insurers may now be held responsible for benefits in relation to accidents not involving the insured's own automobile.

Mr. Luxenberg also argued that under section 268(5) of the Insurance Act, since Mr. Boateng is a "named insured" under his own personal policy with Progressive and not under the Coachman policy, he must claim statutory accident benefits from Progressive. The following are the relevant priority rules under the Act:

Section 268(2): The following rules apply for determining who is liable to pay statutory accident benefits:

1. In respect of anoccupant of an automobil e

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....

Sections 268(4) and 268(5) qualify section 268(2)1.i. as follows:

(4) If, under subparagraph i..., a person has recourse against more than one insurer..., 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..., the person shall claim statutory accident benefits against the insurer under that policy.

(5.1) Subject to subsection (5.2), if there is more than one insurer against which a person may claim benefits under subsection (5), the person, in his or her discretion, may decide the insurer from which he or she will claim the benefits.

Finally, Mr. Luxenberg submitted that section 268(1) of the Act establishes the Schedule as a comprehensive statement of entitlement to statutory accident benefits (a "code unto itself) and that section 2 of the Schedule clearly delineates those entitled to claim statutory accident benefits. He argued that the cases of AXA Home Insurance³, Portch and Movahedi are correct in holding that sections 224(1) and 270 of the Act and section 3(1) of the Schedule do not expand the class of insured persons for the purposes of either the Schedule or the priority rules under the Act. He argued, in particular, that sections 224(1) and 270 of the Act were designed to circumvent the rules governing privity of contract (enabling unnamed insureds to seek redress against insurers), but were not intended to expand the class of those entitled to claim statutory accident benefits. He, therefore, maintained that the issue of whether Mr. Boateng's personal Insurer or the Insurer of the taxicab fleet is liable to pay benefits must be determined under the strict terms of section 268 of the Act and section 2 of the Schedule, and that these provisions require Mr. Boateng to look to his personal Insurer for coverage. The noted legislative provisions are as follows:

Section 2: "insured automobile", in respect of a particular motor vehicle liability policy, means the described automobile and includes a newly-acquired or temporary substitute automobile, all as defined by the policy...

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

(a) in respect of accidents in Ontario, an occupant of the insured automobile...

(c) the named insured...while the occupant of any other automobile....

Section 3(1): If the insured automobile is made available for the regular use of an individual...by a corporation...or other entity..., this Regulation applies to the individual...as if the individual were a named insured.

Section 224(1) defines "insured" as 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."

Section 268(1): Every contract evidenced by a motor vehicle liability policy... , shall be deemed to provide for the statutory accident benefits set out in the Schedule..., subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule.

Section 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.

Progressive's Position:

Counsel for Progressive (the Insurer of Mr. Boateng's personal vehicle) argued that the terms of Mr. Boateng's personal insurance policy require him to look to the Insurer of the taxicab fleet, Coachman, for coverage in this case. Mr. Wilson maintained that the insurance policy clearly distinguishes between the personal and commercial use of automobiles for insurance purposes: paragraph 5.12 of the policy denies coverage to insureds who use their own cars as taxi cabs and this suggests that an insured's personal policy should not cover accidents involving other automobiles used as taxi cabs. Paragraph 5.12 of the policy states that the insurer shall not be liable while (c) "the automobile is used as a taxicab...or for carrying passengers for compensation or hire.... "

Mr. Wilson also argued that since the policy provides greater insurance coverage without conflicting with the Act or Schedule, that expanded coverage should be recognized within the policy's exclusion concerning the commercial use of other automobiles. Mr. Boateng would, therefore, not be covered by his own policy since he was driving a vehicle other than his own for commercial purposes at the time of the accident; accordingly, he would be required to look to the insurer of the taxicab, namely, Coachman. Paragraph 5.2.2 of the policy sets out the expanded definition of "the automobile" referred to by Mr. Wilson and, in the definition of "any other automobile," describes the other vehicles with respect to which the policy holder would be covered. The definition of "any other automobile" (which is not contained in the Schedule), excludes vehicles "used for carrying passengers for compensation or hire...at the time of the loss."

Finally, Mr. Wilson submitted that the underwriting criterion of risk emphasized in the cases of Cattrysse and Sittler⁴ is relevant to determining whether the commercial use of automobiles is intended to be covered by the policy. He argued (contrary to the conclusion reached in Movahedi) that the principle that an insured should look to his own insurer first should not extend personal coverage to commercial use (which carries with it an entirely different set of risks, assumptions and premiums). He further maintained that Movahedi is the only case directly on point and, despite the need for predictability in this area, is not strictly binding on another arbitrator.

Findings:

Two lines of cases have developed at the Commission in cases where an individual can potentially claim from either the personal insurer or the insurer of the vehicle involved in the accident. The first, consisting of Cattrysse and Sittler, suggests that sections 224(1) and 270 of the Act can enlarge the class of insured persons for the purpose of electing an insurer from which to claim statutory accident benefits. Sittler, in particular, found that section 3(1) of the Schedule, coupled with section 2 of the Schedule and sections 224 and 270 of the Act, creates a "new class of insureds, who are 'as if a named insured'" for the purpose of electing an insurer. Sittler also adopted the principle of "fair exchange or fair indemnity" enunciated in Cattrysse to conclude that the insurer of a taxi cab and not the personal insurer should reasonably be expected to cover the risks inherent in driving a cab.

The second line of cases, consisting of Portch and Movahedi (both of which followed the judicial decision of AXA Home), maintains that sections 224(1) and 270 of the Act and section 3(1) of the Schedule do not expand the class of insureds for the purpose of the priority rules under the Act. The cases find a clear separation between priorities issues under the Act and entitlement issues under the Schedule. Portch and Movahedi find that a fundamental change in insurance coverage occurred as a result of the introduction of no-fault benefits, namely, that coverage now follows the person, not the vehicle. It is consistent with this principle that a personal insurer can be held liable for benefits related to injuries arising out of the use of a commercial vehicle covered by a commercial policy. Movahedi also holds that a policy cannot restrict the terms of the Schedule and that an individual can, therefore, still qualify as an insured person under his own policy even if driving another automobile as a taxi at the time of the accident (a situation not otherwise recognized by the terms of the standard policy).

Three arbitration decisions issued after the hearing in this case follow the AXA Home-Portch-Movahedi line of cases with respect to the separation of priorities issues under the Act and entitlement issues under the Schedule: David Brown and State Farm Mutual Automobile Insurance Company and Simcoe & Erie General Insurance Company and Joseph Addai-Agyekum and Coachman Insurance Company (Arbitrator Palmer)⁵ and Robert Edward Crosbie Sr. and Co-operators General Insurance Company and Pilot Insurance Company (Arbitrator Blackman)⁶. With respect to the commercial exclusion issue in this case, the first two cases find that there is a "distinct conflict...between the language defining 'insured person'...[under] the Schedule...and the exclusions in the policy for 'any other automobile'" (the latter being "far more restrictive" than the former) and that this conflict must be resolved in favour of the broader terms of the Schedule (at pp. 8-10 and 9-10, respectively). With respect to the effect of sections 224(1) and 270 of the Act, in Crosbie, Arbitrator Blackman finds that these provisions expand the meaning of the term "insured" for the purpose of allowing persons not party to a contract of insurance to "take action and recover from insurers as if such individuals were parties to the contract"; they do not expand the term "named insured" for the purpose of the priority rules under the Act (at pp. 8-9).

In my view, three basic principles emerge from the cases decided to date. First, section 3(1) of the Schedule expands the class of insureds for the purpose of receiving statutory accident benefits under the Schedule, not for the purpose of determining priorities under the Act. Section 3(1) clearly states that it is the Regulation that applies as if the individual concerned were a named insured, not the Act or the priority rules under the Act. And although there may not be an obvious conflict between section 3(1) of the Schedule and section 268 of the Act (Sittler holding that there was no such conflict), the regulation could only be used to expand the terms of the statute (to "create a new class of insureds") if this were both required by and consistent with the overall legislative scheme. The following passage from Driedger on the Construction of Statutes, Third Edition, is instructive:

Where the provision to be interpreted appears in a regulation, it is read in the context of both the regulation and the enabling Act as a whole. Where the provision to be interpreted appears in the enabling Act, the regulations are often ignored. Because regulations are a subordinate form of legislation, usually made after the enabling Act has been passed, they have limited value in interpreting provisions of the Act. In appropriate circumstances, however, where the Act and regulations are closely meshed so as to form an integrated scheme, provisions from both are interpreted in the light of that overall scheme." (at p. 246)

While I reject Mr. Luxenberg's characterization of the Schedule as a "code unto itself" (which incorrectly suggests that a regulation can operate in isolation from its enabling statute), I find the language of section 3(1) does separate the Schedule from the priority rules under the Act. These two aspects of the legislation need not be interpreted to operate in tandem. In this regard, I agree with the view that sections 224 and 270 of the Act do not expand the term "named insured" for the purpose of section 268. As argued by Mr. Luxenberg and as stated in Crosbie, sections 224(1) and 270 were designed specifically to circumvent the rules governing privity of contract, thereby enabling unnamed insureds to seek redress from insurers as if parties to a contract. In my view, the legislation was not designed to integrate the treatment of insureds for the purposes of both the Schedule and the priority rules of the Act. Therefore, given the subordinate nature of the regulation, it is neither necessary nor appropriate to interpret the Schedule so as to expand the plain and distinct terms of the Act.

Secondly, I agree with the conclusions in Movahedi, Brown and Addai-Agyekum that the definition of "any other automobile" under the policy is more restrictive than the language defining "insured person" under the Schedule. Counsel for Progressive, Mr. Wilson, argues that the expanded definition of "the automobile" under the policy should be read within the policy's exclusion concerning commercial use of other automobiles; he stated that the separation of personal and commercial use of automobiles is supported by paragraph 5.12 of the policy which denies coverage to insureds who use their own cars as taxi cabs. In my view, however, this approach has the effect of excluding individuals not otherwise excluded by the plain terms of the Schedule; it uses one part of the policy's definition of "the automobile" to restrict the meaning of "any other automobile" under the Schedule. Just as a regulation is subordinate to its enabling legislation and must be interpreted so as not to restrict that legislation, so too is an insurance policy subordinate to the terms of the Schedule and must be interpreted so as not to restrict those terms. The definitions under the policy can, therefore, not be used to exclude coverage otherwise provided for under the Schedule.

Finally, it is clear that no-fault legislation introduced a fundamental change in the determination of insurance liability by shifting the focus of the inquiry from the vehicle to the person. This may have the result of imposing responsibility for benefits on an insurer not otherwise connected to a particular accident. A statutory scheme has been super-imposed on what is essentially a contractual arrangement, rendering that arrangement subject to the legislative framework. Although, as argued by Mr. Wilson, a personal insurer may not have intended to insure the risk associated with the use of another (commercial) automobile, this intention is not reflected in the overriding provisions of the legislative scheme. Therefore, if the language of the statute indicates that an insured should look to his or her own insurer first (where it might at first appear more sensible to look to the insurer of the vehicle involved in the accident), then both the insured and the personal insurer are bound by that requirement.

In this case, the Applicant was an occupant of an automobile insured by Coachman. He was also a named insured under his own policy with Progressive. On the plain terms of section 2 of the Schedule, therefore, the Applicant was an insured person in respect of both Coachman and Progressive. He would not be an insured person in respect of Progressive if, by virtue of the commercial exclusion concerning taxi cabs under the policy, he could not be considered an occupant of "any other automobile" within the meaning of section 2 of the Schedule. However, as noted above, the terms of the policy cannot operate to exclude the Applicant from the definition of insured person under the Schedule.

Since the Applicant was both an occupant of an automobile and an insured in respect of both Coachman and Progressive, pursuant to section 268(2)1.i. of the Act, he would have recourse against either Coachman or Progressive for the payment of statutory accident benefits. Under section 268(4) of the Act, the Applicant would be able to choose the insurer from which he would claim benefits. However, the Applicant is only a named insured with respect to Progressive. On the plain terms of the section 268(5), therefore, he is required to seek benefits from Progressive. Pursuant to section 268(5.1), he would have a discretion to seek benefits from either Progressive or Coachman if he were a named insured in respect of Coachman as well. This would only be the case if, by virtue of section 3(1) of the Schedule, the Applicant were treated "as if" he were a named insured. However, although it was not disputed that the automobile involved in the accident had been made available for the Applicant's regular use, section 3(1), as noted above, does not operate so as to extend the class of insureds for the purpose of the priority rules under the Act. The Applicant is, therefore, required to seek statutory accident benefits from the insurer in respect of which he is a named insured, namely, Progressive.

Expenses:

No submissions were received with respect to the awarding of expenses in this case. However, as the dispute with Mr. Boateng was settled prior to the hearing, as Mr. Boateng did not participate in the hearing and as the hearing only took place to determine the priorities issue between the two Insurers, pursuant to section 282(11) of the Act, there is no basis upon which to award expenses to any party.

Order:

The Progressive Casualty Insurance Company of Canada is responsible for paying Mr. Boateng's statutory accident benefits.

January 3, 1996

Eban Bayefsky Arbitrator

Date

APPENDIX "A" - ADDITIONAL MATERIALS

The following additional materials were submitted by Mr. Luxenberg:

1. Sawhney et al. v. Bempah et al. (1995), 1995 CanLII 7157 (ON CTGD), 22 O.R. (3d) 306 (Ont. Ct. Gen. Div.)

2. Section 275(1) of the Insurance Act, R.S.O. 1990, c. I.8

3. Commissioner's Bulletin No. 3/94 - Rental Vehicles and the Priority Rules

4. Excerpt from The Ontario Motorist Protection Plan - A new automobile insurance system, a publication of the Ontario Insurance Commission

5. Factum

6. Brief of Authorities

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. 2Brian C. Portch and Markel Insurance Company of Canada and Royal Insurance Company of Canada, March 20, 1995 OIC File Nos. A-007701 and A-008360, under appeal; Sadegh Movahedi and State Farm Mutual Automobile Insurance Company and Royal Insurance Company of Canada, June 13, 1995, OIC File Nos. A-006901 and A-008245, under appeal.
3. 3AXA Home Insurance Company v. Western Assurance Company, 1994 CanLII 19785 (ON CTPD), [1994] I.L.R. 1-3033 (Ont. Ct. Gen. Div.)
4. 4Daniel Cattrysse and The Westminster Mutual Fire Insurance Company and Anglo Canada General, June 21, 1993, OIC File Nos. A-001618 and A-001789, under appeal; Dorothy Sittler and Canadian General Insurance Company and Pilot Insurance Company, OIC File Nos. A-000951 and A-004495, December 3, 1993, appeal and application for variation dismissed.
5. 5October 10, 1995, OIC File Nos. A-013989 and A-012171, under appeal; October 13, 1995, OIC Files Nos. A-009690 and A-009691, under appeal.
6. 6October 16, 1995, OIC Files Nos. A-009908 and A-012239.