Ontario Insurance Commission

Commission des assurances de l'Ontario

Neutral Citation: 1996 ONICDRG 92

Appeal P-007196

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ZURICH INSURANCE COMPANY

Appellant

and

LEONARD ROBINSON

Respondent

Before:

David R. Draper

Counsel:

William J. McCorriston (for Zurich)

Anthony Azevedo (for Leonard Robinson)

APPEAL ORDER

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

1. The arbitration decision, dated October 12, 1994, is rescinded and the following order is substituted:

Valerie Brilhante was not a dependant of Shawn Robinson at the time of the accident and, therefore, is not entitled to death benefits under section 11 of the Schedule.

2. The Respondent, Leonard Robinson, is entitled to his appeal expenses.

June 6, 1996

David R. Draper Director's Delegate

Date

REASONS FOR DECISION

I. THE ISSUE

This is an appeal by the Zurich Insurance Company ("Zurich") from an arbitration order, dated October 12, 1994, that Valerie Brilhante is entitled to death benefits as a dependant of her deceased father, Shawn Robinson. Briefly stated, the issue is whether Valerie's financial dependence on her mother makes her a dependant of her father, even though her mother and father were no longer spouses at the time of the accident.

The essential facts, as found by the arbitrator, are as follows. Shawn Robinson and Bernadette Brilhante cohabited in a relationship of some permanence and are the natural parents of Valerie Brilhante, who was born on March 28, 1986. The couple separated sometime later, with Bernadette taking custody of Valerie. Shawn continued to purchase some clothing for Valerie and contribute small amounts of cash, but Bernadette and Valerie relied primarily on social assistance.

Shawn stopped providing support entirely when Bernadette began dating Rod Lefebvre. In Bernadette's view, her relationship with Shawn ended in 1988. In February 1989, Rod moved in with Bernadette, and they had a son later that same year. Bernadette continued to receive social assistance, although the amount was adjusted based on her cohabitation with Rod.

Shawn was killed in an automobile accident on August 28, 1990. Leonard Robinson, Shawn's father, applied to Zurich for death benefits for Valerie. Section 11 of Ontario Regulation 672, Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 ("the Schedule"), sets out who is entitled to death benefits. These provisions are repeated in section 2.16 of the policy. The relevant sections state:

11.--(1) If, as a result of an accident, an insured person dies within the benefit period set out in subsection (3), the insurer will pay with respect to the insured person, if Optional Benefit 1 has not been purchased,

(a) $25,000 to his or her spouse, if the deceased is survived by a spouse who was his or her spouse at the time of the accident;

(b) $25,000 to his or her dependants, if the deceased is survived by any dependant who was a dependant at the time of the accident and is not survived by a spouse who is entitled to a benefit under this section;

(c) $10,000 to each of his or her surviving dependants who was a dependant at the time of the accident; and

(3). For the purposes of subsections (1) and (2), the benefit period is,

(a) 180 days from the day of the accident unless clause (b) applies; or

(b) 156 weeks from the day of the accident if during that period there has been continuous disability as a result of the accident.

(4) If at the time of the accident the deceased person had more than one person entitled to claim as his or her spouse, the $25,000 payment under clause (1)(a) or $50,000 under clause (2)(a) will be divided equally between or among such persons who survive the deceased and who at the time of the death were still spouses of the deceased.

(5) Payments under clauses (1)(b) and (d) and clauses (2)(b) and (d) will be paid in equal shares to the surviving dependants.

(6) No amount is payable under subsection (1) or (2) to a spouse or dependant unless the spouse or dependant, as the case may be, survives the deceased by thirty days.

[emphasis added]

Valerie's claim was for benefits under both sections 11(1)(b) and (c) as a dependant of the insured person, Shawn Robinson. Section 3(2) of the Schedule (section 2.2.2 of the policy) defines "dependant" as follows:

3.--(2) For the purposes of this Schedule, a person is a dependant of another person if the person is principally dependent for financial support on the other person or the other person's spouse.

It was conceded that Valerie was not financially dependent on Shawn. The claim was that Valerie was Shawn's dependant, within the meaning of section 3(2), because she was principally dependent for financial support on Shawn's spouse, Bernadette.

"Spouse" is not defined in the Schedule, but is defined in section 224(1) of the Insurance Act, 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.

As Mr. Justice Ferguson pointed out in Catherwood v. Young Estate (1995), 1995 CanLII 7254 (ON CTGD), 27 O.R. (3d) 63, the standard automobile policy does not include the word "or" in the definition of "spouse" (section 5.2.4). It is not clear that anything turns on this discrepancy, but the parties agree that the definition in the Insurance Act governs.

The arbitrator found that Bernadette was Shawn's spouse because they had cohabited in a relationship of some permanence and were the natural parents of Valerie. The fact that they were no longer cohabiting at the time of the accident did not end their spousal status because, in the arbitrator's opinion, "section 224 of the Act imposes no temporal termination on the definition of spouse, with regard to common law unions" (p.7).

According to the arbitrator's approach, the definition of "spouse," without any time element, is plugged into the Schedule wherever the term "spouse" is used. If there is a time component to the determination of spousal status, it must be found in the other words of the Schedule. For example, section 11(1)(a) of the Schedule (section 2.16(a) of the policy) states that to qualify for death benefits as a spouse, the person must have been the deceased person's "spouse at the time of the accident." The arbitrator agreed that Bernadette was not Shawn's spouse at the time of the accident and, therefore, was not entitled to death benefits for herself. She concluded, however, that this did not affect Valerie's entitlement to death benefits because the definition of dependant "does not require that the dependant be dependent upon a deceased's spouse who is entitled to the spousal benefit, i.e. by being a 'spouse at the time of the accident'" (p.8). In the arbitrator's view, to find otherwise would be to interpret section 3(2) of the Schedule as if it read (p.10):

a person is a dependant of another person if the person is principally dependent for financial sup ort on the other person or the other person's spouse who was a spouse at the time of the accident;

In reaching her decision, the arbitrator specifically disagreed with the interpretation of "spouse" in McGuire (deceased) and Zurich Insurance Company and State Farm Mutual Automobile Insurance Company, (June 20, 1994, OIC A-002988 and A-002989). In that case, the arbitrator stated as follows:

Section 224 of the Insurance Act (1990) is clear, in my opinion. I read the words in the definition at section 224, in their ordinary and grammatical sense, to mean that unmarried parties are "spouses" so long as they continue to cohabit in a relationship, and no longer.

Zurich claims that the arbitrator erred in her interpretation of the legislation. It submits that having found that Bernadette was not Shawn's spouse at the time of the accident, the arbitrator should not have treated her as his spouse for the purposes of Valerie's entitlement to death benefits.

II. ANALYSIS AND CONCLUSIONS

Valerie clearly suffered a loss. She was four years old when her father was killed in an automobile accident. In a traditional tort system, her remedy would be to sue the negligent party or parties for damages. Ontario's approach to compensation changed in June 1990. The right to sue was restricted in exchange for significantly expanded "first-party" accident benefits, including death benefits, payable without reference to fault. Because a death was involved, however, Valerie still had a right to sue as Shawn's "child," according to Part V of the Family Law Act.

I do not know if there was a tort claim in this case, but that is not the issue. Valerie's claim in this forum was not for damages. It was for death benefits under the automobile insurance policy that Zurich issued to Shawn Robinson.

One can imagine a "no-fault" system in which death benefits are payable to the insured person's minor children, whether or not the insured person was supporting them at the time of the accident. However, that is not the approach taken in the Schedule. Death benefits are available to "dependants," not "children."¹ The interpretation of "dependant" in section 3(2) of the Schedule makes it clear that a child is not entitled to death benefits unless at the time of the accident, he or she was "principally dependent for financial support" on the deceased or the deceased person's spouse.

It is important to clarify what was not in issue in the arbitration. In many dependency cases, the issue is whether the applicant was principally dependent for financial support on the deceased at the time of the accident. This can involve difficult factual questions about the contribution made by the deceased, as compared with other sources. It might also involve a consideration of the deceased person's obligation to provide support. Reference was made to two decisions that considered whether an applicant's dependency can be based on the deceased person's obligation to provide support, even if that obligation was not being met at the time of the accident.² That was not the issue in this case. There was no suggestion that Valerie was financially dependent on her father at the time of his accident, either because he was paying support or because he had a legal obligation to do so.

Valerie's claim was based on her dependency on Bernadette. Again, this type of claim will often turn on a factual determination of the relative financial contributions that the applicant received from various sources. That was not the central problem here. The arbitrator found that at the time of the accident, Valerie was principally dependent for financial support on Bernadette.

This left the question of whether Bernadette was Shawn's spouse for the purposes of determining Valerie's dependency under section 3(2) of the Schedule. This could have involved a dispute about whether Bernadette was still Shawn's spouse at the time of the accident. The Court of Appeal has recognized that mere separation may not be sufficient to end a common law relationship.³ However, that is not the contention in this case. It was conceded that Bernadette was no longer Shawn's spouse at the time of the accident.

The critical question, therefore, was quite narrow: Could Valerie qualify as Shawn's dependant by being financially dependent on Bernadette, even though Bernadette was no longer Shawn's spouse at the time of the accident? In other words, did Bernadette's spousal status continue with respect to Valerie? The arbitrator concluded that it did. Although she rejected the argument that once established, common law relationships continue forever, she found that the parent-child link continues:

I disagree that the interpretation I would put to the words of section 224(1) of the Act, where "spouse" is defined, would "allow common law spousal relationships to continue indefinitely". The only link which continues indefinitely is the parent-child link, which is preserved, albeit rather awkwardly, by the dependency wording tied to the deceased or that person's spouse. (p.11)

In reviewing this decision, I have the advantage of a number of later court and arbitration decisions (see Appendix A for a list of cases considered). Although these decisions can all be distinguished, their analysis of the definition of "spouse" and its application to the Schedule is quite helpful.

In McLean and Wellington Insurance Company and Economical Mutual Insurance Company, (February 20, 1995, OIC A-006649 and A-006661), under appeal, the arbitrator was faced with a dispute over which insurer was responsible for paying accident benefits. Mary McLean applied to Wellington for accident benefits under a policy issued to Dan McLean, claiming to be his spouse. Wellington denied coverage on the basis that she was not Dan's spouse at the time of the accident.

The arbitrator found that Mary and Dan McLean had cohabited in a relationship of some permanence and were the parents of two children, but had not cohabited for at least a year before the accident. The question was whether Mary was an "insured person" under the Wellington policy under section 2.2.3(e) of the policy (section 2(e) of the Schedule), which states:

(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 added]

According to the arbitration decision, Economical argued that there is no temporal component to the definition of "spouse" and, therefore, once a person achieves the status of "spouse," he or she will always retain that status for the purposes of automobile insurance coverage. The arbitrator found the definition equivocal, but rejected Economical's position:

In my view, it is a matter of common sense to recognize that both marriages and common-law relationships end. The termination of the status of married "spouse" occurs on death or a final decree of divorce. The termination of the status of not married "spouse" is largely a question of fact to be determined in each case. A connection, if any, between the timing of the spousal relationship and the motor vehicle accident only emerges when the definition of "spouse" is considered within the specific context in which it is used.

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 dependants 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. (p.14)

The status of the children was not in issue in McLean and, therefore, the arbitrator did not address that part of the Robinson decision.

In Catherwood v. Young Estate, cited above, the question was whether the deceased person's former spouse and their children qualified for death benefits under his policy. According to the agreed statement of facts, Wade Catherwood and Jacqueline Catherwood were married and had two children. They were divorced in 1988. By court order, Wade was required to pay both spousal and child support. In 1989, Wade remarried. He and his second wife had a standard automobile insurance policy issued by Pilot Insurance. In July 1990, Wade died of injuries sustained in a motor vehicle accident. Jacqueline claimed death benefits under the Pilot policy as Wade's spouse (not as a dependant), and death benefits for the two children as Wade's dependants.

After discussing the proper approach to interpreting the automobile insurance policy, Justice Ferguson rejected the argument that there is no time component to the determination of spousal status. He found that "there is a theme throughout the provisions requiring a temporal connection as a condition of entitlement" (p.17). Justice Ferguson agreed with the decision in McLean that spousal status must be determined at the time of the accident. He also agreed with the view expressed in McGuire that the policy's recognition that an insured person can have more than one spouse was not meant to extend benefits to those whose spousal relationship has ended. Rather, it was intended to "divide compensation where, for instance, a marriage has not been legally terminated, but the person has entered into another spousal relationship" (McGuire, p.7).

At the time of the accident, Jacqueline Catherwood was not Wade Catherwood's spouse - they were divorced. Justice Ferguson concluded, therefore, that she did not qualify for death benefits under section 11(1)(a) of the Schedule (section 2.16 of the policy).

Justice Ferguson also had to decide the entitlement of the Catherwoods' children to death benefits. The plaintiff relied on the arbitration decision in this case (Robinson), submitting that someone is a dependant of the deceased if he or she is financially dependent on the deceased person's former spouse, either legal or "common law." Justice Ferguson rejected this argument at page 80:

I disagree with the reasoning in Robinson for several reasons:

1. I disagree that there is no temporal requirement in the definition of "spouse".

2. I do not think the Children's Law Reform Act, R.S.O. 1990, c.C.12, is applicable. A contrary intention does appear in the no-fault benefit provisions.

3. The issue of unfairness is not a determinative factor. With respect, I think the arbitrator was trying to re-write the policy of the legislature.

4. I do not think it is reasonable to construe "spouse" in s.2.2.2 as including a person who is no longer a spouse.

Counsel did not suggest that I am required to follow the decision in Catherwood. Nevertheless, I substantially agree with its analysis and choose to follow it.

Even if there is no temporal component to the definition of "spouse" when read alone, I agree with the reasoning in McGuire, McLean, and Catherwood that there is a time element inherent in the accident benefits scheme. The legislation requires insurers to include various types of coverage in their automobile insurance policies. The policy sets out the coverage, including accident benefits, but the determination of who is entitled to what benefits must be done in response to a specific claim.

The triggering event for most claims is the accident, making that the critical date. However, death benefits are payable if the insured person dies within the "benefit period" set out in section 11(3) of the Schedule (section 2.18 of the policy). This can be up to 156 weeks after the accident. In my view, much of the troublesome language in section 11 is intended to deal with the period between the accident and the insured person's death. Justice Ferguson reached a similar conclusion in Catherwood (p.77):

Section 2.17(a) provides that a benefit shall be paid to the spouse of the deceased "who was his or her spouse at the time of the accident". I take this as meaning that in order to be entitled as a "common law" spouse under either category of the definition in s.5.2.4(c) the claimant must be cohabiting with the deceased at the time of the accident. I believe this interpretation is consistent with the provisions of ss. 2.16(b) and 2.17(b) which refer to situations where the deceased is not survived by a "spouse who is entitled to a benefit under this section". This contemplates that some persons will fall under the definition of "spouse" but not be entitled because they were not a spouse of the deceased at the time of the accident. This could arise where the person married the spouse after the accident.

Therefore, I do not accept that the phrase, "a spouse who was his or her spouse at the time of the accident," means that the policy recognizes spouses whose spousal relationship ended before the accident. Rather, it is intended to exclude those who are spouses at the time of the insured person's death, but were not at the time of the accident.

It was submitted that similar definitions of "spouse" in other legislation have been interpreted as including former spouses (Re Sanderson and Russell, supra; and Whitney v. Lee Estate, [1990] O.J. No. 1130). I adopt Justice Ferguson's analysis in Catherwood that "the fact that the Schedule may have incorporated some definitions from family law statutes does not mean the policy from those statutes should be applied to the Schedule" (p.72). The context in which the term is used in the legislation must be considered. As stated above, it is my view that there is an inherent time component in the accident benefits scheme.

I was also referred to Justice Pitts' decision in Economical Mutual Insurance Co. v. Lott, [1995] O.J. No. 1300. Like McLean, this was a priorities dispute involving the interpretation of "spouse" in the definition of "insured person." The couple had lived in a relationship of some permanence and were the parents of two children, but separated some five years before the man was killed in an automobile accident. The issue was whether the deceased was covered under the woman's automobile insurance policy as her spouse, despite the fact that the relationship had ended well before the accident.

Justice Pitts said his first impression was that the definition of "spouse" speaks as of the time of the accident. He noted that Justice O'Connor had taken this approach in McIntyre v. West Wawanosh Mutual Insurance Co., [1994] O.J. No. 652. He concluded, however, that he was bound by the decision of the Court of Appeal in Sanderson, supra.⁴

Justice Ferguson dealt with the Lott decision in Catherwood. Again, I adopt his analysis (p.77):

With the greatest of respect, I do not think Sanderson determines the issue under the no-fault benefit provisions. As I have discussed, the No-Fault Benefit Schedule is not part of a coherent package of family law legislation. It provides automatic benefits to spouses regardless of need unlike the Family Law Act which provides a scheme for court-ordered support where need is established. In addition, the Schedule specifically states that a claimant under the category of spouse will only be entitled to benefits if that person is a spouse at the time of the accident.

It is my view that a person's status under the policy as a "spouse" or "dependant" must be determined at a particular point at time. For death benefits, the critical times are the date of the accident and the date of the insured person's death.

The analysis of dependency must distinguish between the parent-child relationship and the spousal relationship. Shawn still had a legal relationship with Valerie even though his spousal relationship with Bernadette had ended. The difficulty with Valerie's claim is that it was not based on her continuing relationship with her father, but on her financial dependence on his spouse. The necessary link, therefore, was the spousal relationship, not the parent-child relationship.

The arbitrator accepted that spousal relationships end, but tried to find an interpretation that would treat children of former common law spouses in the same manner as children of married spouses whose relationship is similarly over, but who are not divorced. In my view, however, the implications of her analysis are much broader than that.

For example, it seems to me that if Shawn and Bernadette remained spouses for the purposes of determining dependency, then anyone who was principally dependent for financial support on Bernadette at the time of the accident would qualify for death benefits as a dependant of Shawn. On the facts of this case, that would include Bernadette and Rod's son.

The arbitrator's approach would also affect insurer priorities because the definition of "insured person" in the Schedule does not impose any specific time element. Using the arbitrator's approach, Bernadette would have been covered by Shawn's policy as his spouse. This means that if she had been injured in an accident, she could have claimed accident benefits under his policy even if she had her own insurance (s.268(4) and (5) of the Insurance Act).

In my opinion, these outcomes are not intended and result from distorting the interpretation of "spouse" in the context of the Schedule. I agree with Justice Ferguson that even if some of the consequences of including a time component in the determination of spousal status are seen as anomalous, they are less troublesome than the alternative approach (p. 82):

I recognize that my interpretation of the policy results in what may appear to be undesirable anomalies. For instance, my interpretation will exclude persons receiving spousal benefits if they were former common law partners of the deceased but will permit recovery by separated married partners. My interpretation will also exclude from entitlement as dependants the children who are principally dependent on former common law spouses but make eligible children who are dependent on separated married partners. It would also exclude the children of divorced spouses. Those results, however, appear to me to be what the policy provisions intend and if the legislature or the cabinet do not like these ramifications, they can amend the provisions.

In conclusion, Valerie Brilhante was not financially dependent on Shawn Robinson at the time of his accident. She was financially dependant on her mother, Bernadette Brilhante. Because Bernadette was no longer Shawn's spouse by the date of the accident, Valerie could not qualify as Shawn's dependant based on her financial dependence on Bernadette.

III. EXPENSES

In my view, Mr. Robinson should receive his reasonable appeal expenses. He was successful at the arbitration and did nothing to delay the appeal. If the parties cannot agree on the amount of the expenses, an assessment can be arranged through the Registrar's office.

June 6, 1996

David R. Draper Director's Delegate

Date

APPENDIX A

Cases Considered:

1. Catherwood v. Young Estate (1995), 1995 CanLII 7254 (ON CTGD), 27 O.R. (3d) 63 (Ont. Gen. Div.).

2. McLetchie and Wawanesa Mutual Insurance Company, (September 14, 1995, OIC A- 008179).

3. Economical Mutual Insurance Co. v. Lott, [1995] O.J. No. 1300 (Ont. Gen. Div.).

4. McLean and Wellington Insurance Company and Economical Mutual Insurance Company, (February 20, 1995, OIC A-006649 and A-006661).

5. McGuire (Deceased) and Zurich Insurance Company and State Farm Mutual Automobile Insurance Company, (June 20, 1994, OIC A-002988).

6. Macartney v. Dominion of Canada General Insurance Co., [1994] O.J. No. 1976 (Ont. Gen. Div.).

7. McIntyre v. West Wawanosh Mutual Insurance Co., [1994] O.J. No. 652 (Ont. Gen. Div.).

8. Re Sanderson and Russell (1979), 1979 CanLII 2048 (ON CA), 24 O.R. (2d) 429 (C.A.).

9. Re Labbe and McCullough (1979), 1979 CanLII 2139 (ON PROVCT), 23 OR. (2d) 536 (Prov. Ct. F.D.).

10. Whitney v. Lee Estate [1990] O.J. No. 1130 (H.C.J.).

11. July et al v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R. (2d) 129 (C.A.).

Footnotes

1. 1The word "child" is used in sections 2(f) and 6(2) of the Schedule. In section 2(f), it is used as distinct from "a dependant."
2. 2Catherwood v. Young Estate (1995), 1995 CanLII 7254 (ON CTGD), 27 O.R. (3d) 63 (Ont. Gen. Div.); and McIntyre v. West Wawanosh Mutual Insurance Co., [1994] O.J. No. 652 (Ont. Gen. Div.).
3. 3Re Sanderson and Russell (1979), 1979 CanLII 2048 (ON CA), 24 O.R. (2d) 429 (C.A.).
4. 4I note counsel's understanding that the Lott decision is under appeal.