Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 105

Appeal P-006649 & P-006661

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ECONOMICAL MUTUAL INSURANCE COMPANY

Appellant

and

WELLINGTON INSURANCE COMPANY

Respondent

and

MARY (TOBIN) McLEAN

Respondent

Before:

Susan Naylor, Director's Delegate

Counsel:

William J. McCorriston (for Economical)

Colin S. Jackson (for Wellington)

Michael J. Gillen (for Mary (Tobin) McLean)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, Chap.I.8, as amended, it is ordered that:

The appeal is dismissed and the arbitration order dated February 20, 1995 is confirmed.

June 24, 1996

Susan Naylor Director's Delegate

Date

REASONS FOR DECISION

I. THE NATURE OF THE APPEAL

This is an appeal by Economical Mutual Insurance Company (Economical) from an arbitration order dated February 20, 1995. The arbitrator had to decide which company, Economical or Wellington Insurance Company (Wellington), is responsible for paying Ms. McLean's accident benefits. If Mary McLean and Dan McLean are spouses under the terms of Dan McLean's standard owner's automobile policy (O.P.F. 1), Wellington has to pay; if not, Economical is responsible.

On December 29, 1992, Ms. McLean was a pedestrian when she was struck by an automobile, insured by Economical. Ms. McLean did not have her own automobile insurance policy at that time but her now husband Dan McLean held a valid policy of insurance issued by Wellington. Ms. McLean applied to Wellington for accident benefits under this policy, but her application was rejected on the basis that she was not Dan McLean's spouse at the time of the accident. The arbitrator agreed with Wellington and ruled that Economical had to pay Ms. McLean's benefits. Economical appeals this ruling. Both policies provide the accident benefits prescribed in the Statutory Accident Benefits Schedule - Accidents before January 1, 1994, O. Reg 672, R.R.O. 1990, (the Schedule).

II. THE FACTS

The arbitration proceeded on the basis of an agreed statement of facts, which is reproduced as an appendix to the arbitration decision. The material facts of the relationship are contained in paragraphs 6 to 10, as follows:

Mary McLean and Dan McLean first met in 1986 and started to cohabit in late 1987. They lived at 101 Bloor Street East in Oshawa for one year and then they moved to 900 Glen Street in Oshawa. Mary McLean lived at the Glen Street address for three and a half years and during this time Dan McLean lived at the Glen Street address on and off with her for about six months. In November, 1990, Mary McLean moved from the Glen Street address to 1100 Oxford Street in Oshawa and Dan McLean continued to live with her at the Oxford Street address on an on and off basis, but did not live there at all during the calender year 1992.
While Mary McLean and Dan McLean cohabited two children were born of their relationship being, Jenny (D.O.B. August 26, 1987) who was five years old at the time of the December 29, 1992 accident and Kenneth (D.O.B. September 13, 1991) who was fifteen months old at the time of the December 29, 1992 accident.
By mutual agreement, Dan McLean paid $100 per month to Mary McLean for the support of their two children during 1992. Mary McLean worked at Ajax Textiles during this time period. In 1992, Dan McLean lived at his mother's house at 885 Oxford Street a short distance away from Mary McLean and their two children who lived at 1100 Oxford Street. In 1992 Dan McLean visited with his children on a regular basis. When Mary McLean and Dan McLean were not living with each other they did not cohabit in any form of common-law relationship with other people.
After the December 29, 1992 accident, Dan McLean assisted Mary McLean with the care of their two children and Mary McLean's personal care. They were able to resolve their differences and they were married on June 5, 1993.
On December 29, 1992, Mary McLean and Dan McLean did not live together and had not done so for at least one year. When Mary McLean and Dan McLean last stopped living together before Mary McLean was involved in the December 29, 1992 accident, they had cohabited in a relationship of some permanence of which two children were born of whom they were the natural parents.

III. THE POLICY

A person is covered for benefits under an automobile insurance policy if he or she is an "insured person" in respect of the policy. "Insured person" is defined in the section 2.2.3. of the standard owner's policy to include,

(d) any person who is not the occupant of an automobile or of rolling stock that runs on rails who is involved in an accident in Ontario involving the insured automobile,

(e) the named insured, his or her spouse and any dependant of either of them who is not the occupant of an automobile or of rolling stock that runs on rails who is involved in an accident,

(Emphasis supplied)

Ms. McLean is definitely an insured person under the Economical policy under subsection (d). She is also an insured person under the Wellington policy under subsection (e) if she is Dan McLean's spouse. If she is covered under both policies, the priority rules set out in section 268(2)¹ of the Insurance Act require Wellington to pay her benefits.

"Spouse" is defined in section 224(1) of the Insurance Act², as follows:

“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)

There is no explicit temporal requirement to the definition of spouse. The section does not indicate whether the couple must be cohabiting as of the time of the accident or if it is sufficient that they lived together in a relationship of some permanence in the past, even if their relationship ended before the accident. It is Economical's position that Ms. McLean continued to be Dan McLean's spouse, despite the fact that they were separated in the year before the accident.

IV. THE ARBITRATOR'S DECISION

Arbitrator Mackintosh found that Mary and Dan McLean were not cohabiting in a relationship of some permanence at the time of the accident and had not done so for more than a year:

It is clear from the evidence that Dan's relationship with his children continued during 1992. However there is no evidence that Dan's relationship with Mary continued beyond the end of 1991, although neither Dan nor Mary cohabited with anyone else during 1992. I conclude that Mary and Dan stopped cohabiting in a relationship of some permanence for more than one year preceding the accident in December 1992 and were not cohabiting at the time of the accident.

(Decision, page 4)

The arbitrator concluded that the definition of spouse was equivocal viewed in isolation, but, placed in context in the policy provisions, was linked to the time of the accident.

In this case, "spouse" must be interpreted in the context of the definition of "insured person" under section 2 of the Schedule and 2.2.3(e) of the standard O.P.F. 1 auto policy. The definition of "insured person" refers to the triggering event of an accident and includes the named insured his or her "spouse" and the dependents of either of them. It is reasonable to infer that this reference to "spouse" relates to the situation of the named insured at the time of the accident rather than some other point in time. It is only when an accident has occurred that the circumstances of the named insured become relevant. At that point, the status of "spouse" may determine whether an applicant qualifies as an "insured" under the scheme; may establish priority among several potential insurers under section 268 of the Insurance Act; or may determine whether an applicant qualifies for certain benefits under the policy.

(Decision, page 14)

Arbitrator Mackintosh concluded that it was not sufficient for Dan and Mary McLean to have cohabited in a relationship of some permanence at any time prior to the accident - they must have cohabited in such a relationship which continued at the time of the accident

V. ECONOMICAL'S ARGUMENT

The essence of Economical's position on appeal is that a cessation of cohabitation as partners does not bring to an end spousal status. Its submissions can be summarised as follows:

In the absence of a time reference in either the definition of "spouse" in section 224(1) of the Insurance Act or in section 2.2.3 of the policy, non-married spousal status, once established, should continue until the relationship is shown definitively to be at an end. This generally requires some terminating process, event or conduct, where the parties have an effective opportunity to put their affairs in order and to deal with the dependency relationships created within the family unit. An example might be the marriage of one party to someone else, or separation under the terms of a formal court order. Common law spouses are in a more vulnerable position than married spouses, who, on divorce, have the benefit of legal mechanisms to help them resolve their mutual affairs. Since the accident benefits scheme is remedial, the definition of spouse should be given a broad and liberal interpretation to redress this situation.

VI. ANALYSIS AND CONCLUSION

The arbitrator's concluded that a temporal component is implicit when the definition of "spouse" is placed in context. This view is supported by the weight of decisions to date by judges and arbitrators. These include Catherwood v. Young (1995) 1995 CanLII 7254 (ON CTGD), 27 O.R. (3d) 63, McIntyre v. West Wawanosh Mutual Insurance Co. [1994] O.J. No. 652, McGuire and Zurich Insurance Co., (June 20, 1994, OIC A-002988 and A-002989) and Zurich Insurance Company and Robinson (June 6, 1996, OIC P-007196).

These other decisions were not insurer priority disputes but involved claims for death benefits based upon spousal status. Under the policy, the insured person's spouse is entitled to a lump sum payment "if the deceased is survived by a spouse who was his or her spouse at the time of the accident".³ Benefits are also paid to each surviving dependant "who was a dependant at the time of the accident".⁴

In a detailed and carefully constructed judgement Mr. Justice Ferguson, in Catherwood v. Young, reviewed the existing case-law and addressed many of the same arguments presented by Economical here. Applying a contextual approach to statutory interpretation, he found "a theme throughout the provisions requiring a temporal connection as a condition of entitlement" (page 75). Justice Ferguson recognised that his interpretation would result in different treatment of former common law partners (and the couple's children who were not dependent on the insured parent) compared to married but separated partners and their children. However, he suggested the solution lay in legislative or regulatory change.

Catherwood was followed in the recent arbitration appeal in Zurich and Robinson, issued after argument on this appeal.

Justice Pitt took a contrary view in Economical Mutual Insurance Co. v. Lott [1995] O.J. No. 1300⁵. Justice Pitt's first impression was that the definition section spoke as of the time of the accident. However, he felt that he was bound to find that Ms. Lott qualified as a spouse, even though she and her former partner had separated before the accident, because of the decision of the Court of Appeal in Sanderson v. Russell (1979) 1979 CanLII 2048 (ON CA), 24 O.R (2d) 429, decided under the then newly-enacted Family Law Reform Act, 1978, c.2.

In Catherwood, Justice Ferguson considered the decision in Lott, but did not follow it. He concluded that the reasoning in Sanderson which related to the support provisions of the Family Law Reform Act could not necessarily be transferred to the automobile insurance context and that the Schedule was not "part of a coherent package of family law legislation" (Decision, page 77).

I share the view expressed by Justice Ferguson in Catherwood that, while the family law and automobile insurance schemes are underpinned by common social obligations and objectives and the definition of "spouse" in the policy tracks family law legislation, the schemes are structured in quite different ways. The definition of "spouse", while common to both, is given meaning in the context of each piece of the legislative scheme.

The interplay between mutual support obligations under family law legislation and no-fault benefits⁶ was considered by the Supreme Court of Canada in Miron v. Trudel 1995 CanLII 97 (SCC), [1995] 2 S.C.R. 418. Madame Justice L'Heureux-Dube considered the basic purpose of the standard automobile policy to be

almost inextricably related to that mutual obligation and to the relationship of interdependency upon which that obligation is premised.

In the decision, the Court held that the exclusion of non-married spouses under the pre-1990 automobile policy contravened section 15 of the Canadian Charter of Rights and Freedoms.

Miron was not discussed in Catherwood. However, I do not think that the reasoning of the Court in Miron supports the contention that common law spousal status in the context of the automobile insurance policy is indefinite or continues after the parties stop cohabiting. If anything, it can be viewed as lending support to Arbitrator Mackintosh's finding that:

it is more likely that the Legislature simply intended to extend the same coverage and benefits enjoyed by married spouses, to the immediate family of not married "spouses", who can establish that they share a relationship of some standing and permanence, at the time that the family unit is affected by an accident.

(Decision, page 15)

Economical traced the historical development of the spousal provisions in the Insurance Act and policy, suggesting that its thrust was indicative of a legislative intent to broaden the definition of "spouse". It also pointed to further changes in the Statutory Accident Benefits Schedule - Accidents on or after January 1, 1994⁷, that re-introduce an express time component. These arguments were canvassed by the arbitrator. Both she and Justice Ferguson concluded that the history was not particularly helpful in determining whether the policy extends to former common law partners. I agree with their conclusion in this regard.

In distinguishing the cases before me, Economical argued that the term "spouse", in the context of the death benefit provisions, is narrower than applied elsewhere in the policy, and specifically the meaning of "insured person". Former common law partners are included in the latter but excluded from the former because subsections 2.16 and 2.17 of the policy contain an explicit reference to the time of the accident. I disagree with this submission. It is difficult to think of a sensible policy reason behind the difference suggested. One would have thought that the provision of benefits in the event of the death of a spouse warranted at least as great, rather than less, protection than in other circumstances. I prefer Mr. Justice Ferguson's explanation that the wording in the death benefit provisions is intended to address spousal relationships entered into in the period between the accident and the insured person's death.

I agree with the reasoning in Catherwood, Robinson and McIntyre. While these decisions relate to different provisions, the approach taken in McLean was considered in both Catherwood and Robinson, and substantially adopted.

I agree with Arbitrator Mackintosh's analysis and accept her basic conclusion that a temporal connection is implicit in meaning of "spouse" interpreted in the context of "insured person" under section 2.2.3. of the policy. I agree that "it is a matter of common sense to recognise that both marriages and common-law relationships end".

Economical argues that additional criteria should govern the termination of non-married spousal partnerships beyond the fact that the parties cease to cohabit in a relationship of some permanence. It points to the unequal treatment afforded to married-but-separated spouses and their children, (where the spouses' marital status is recognised until the formality of divorce), and non-married spouses and their children (where spousal status ends when cohabitation ends).

I do not accept that the Insurance Act or automobile policy contemplates some formal process or document before the end of a common law partnership is recognised. While marriage ends on death or divorce, it is cohabitation as partners that determines non-married spousal status. When the parties cease to cohabit in the requisite relationship, they cease to be spouses. Whether a couple continues to cohabit in a relationship of some permanence is a question of fact, based upon the particular circumstances.

The existence of a formal order may be relevant to the inquiry but it is not essential. It is important to note that a period of separation will not necessarily terminate cohabitation.⁸ The determination depends on the nature of the separation, and the intention of the parties.⁹ The subsequent course of the relationship, viewed with the benefit of hindsight, may help inform this inquiry. Each case turns on its own facts.

This case was based upon an agreed statement of facts. The facts of the case are limited to those agreed to and the parties did not take issue with the arbitrator's finding that Dan and Mary McLean were no longer cohabiting in a relationship of some permanence at the time of the accident. Economical's position is that, despite this, Ms. McLean continued to be Dan McLean's spouse. I have rejected Economical's argument. There is no alternative basis for me to interfere with the arbitrator's finding that Mary McLean was not Dan McLean's spouse under his automobile insurance policy. The appeal therefore must fail.