Neutral Citation: 1997 ONICDRG 195

Appeal P96-00037

OFFICE OF THE DIRECTOR OF ARBITRATIONS

PROGRESSIVE CASUALTY INSURANCE COMPANY OF CANADA

Appellant

and

OLD REPUBLIC INSURANCE COMPANY

Respondent

and

HARJIT AUJLA

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Mark S. Wilson (for Progressive)

J.D. Tomlinson (for Old Republic)

Harjit Aujla did not participate personally or through counsel

APPEAL ORDER

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

1. The appeal is dismissed and the arbitration order dated March 20, 1996, is confirmed.

2. No appeal expenses are payable.

October 27, 1997

David R. Draper

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal involves a dispute between two insurers about which company is responsible for paying accident benefits to Harjit Aujla.

Mr. Aujla was injured while driving a heavy commercial truck owned by a corporation, but made available for his regular use. The truck was insured by Old Republic Insurance Company ("Old Republic"). Mr. Aujla's personal vehicle was insured by Progressive Casualty Insurance Company of Canada ("Progressive"). Because the accident was in December 1994, the arbitrator applied the provisions of the Insurance Act then in effect ("Bill 164"), Ontario Regulation 776/93, Statutory Accident Benefits Schedule - Accidents After December 31, 1993 and Before November 1, 1996 ("the SABS - 1994"), and the plain language owner's policy approved by the Commissioner (O.A.P.1).

The arbitrator concluded that Mr. Aujla's personal insurer, Progressive, was responsible for paying his benefits. Progressive appeals this decision.

II. RELATED APPEALS

Three other similar appeals were heard on the same day as this one.[1] As a result, I had the advantage of hearing submissions from a number of experienced counsel.

All four appeals involve someone injured while an occupant of a vehicle they did not own or insure. The common question is whether they should claim accident benefits from the insurer of that vehicle or their own insurer (or their spouse's). However, the cases are not identical. Three involve someone driving a commercial vehicle, either a taxi or a heavy truck. In the fourth, the injured person was a passenger in a car owned by someone else. Also, due to the dates of the accidents, three cases are decided under the legislation in effect until December 31, 1993 (Bill 68), while one involves the later scheme (Bill 164).

In each case, the arbitrator concluded that the person's own insurer (or the spouse's) was responsible for paying accident benefits. Those insurers appealed. Because of the differences among the cases, the appeals were not formally consolidated and separate appeal decisions are being issued.

III. BACKGROUND

The facts are not contested. Mr. Aujla worked as a truck driver. On December 17, 1994, he was injured in a single-vehicle accident while making a commercial delivery in a truck weighing more than 4,500 kilograms. Mr. Aujla did not own or insure the truck, but it was made available for his regular use by the corporation that owned it - 2805651 Canada Inc., operating as XTD-Xpress Transportation Distribution ("XTD-Xpress"). XTD-Xpress insured the truck with Old Republic under an automobile insurance policy listing it as the named insured, with no mention of Mr. Aujla.

Mr. Aujla had his own vehicle, a 1982 Pontiac. It was insured under a policy issued by Progressive, with Mr. Aujla listed as the named insured.

Following the accident, Mr. Aujla applied to both Old Republic and Progressive. Both insurers denied coverage, claiming the other was responsible.

IV. ANALYSIS

Although this appeal raises many of the same issues as the Adabi-Ghomi, Addai-Agyekum, and Alfred appeals, cited above, it is the only one decided under Bill 164. The question is whether the amendments to the Act, the regulations and the standard owner's policy affect the outcome.

Bill 164 did not change the priorities rules in section 268(2) of the Act, with one exception. The section was amended to clarify that if the injured person is a named insured under two policies (or the spouse or dependant of the named insured), he or she can choose to claim accident benefits under either one. However, if at the time of the accident, the injured person was an occupant of an automobile in respect of which he or she he or she is the named insured (or the spouse or dependant of the named insured), he or she must claim benefits under that policy. The relevant parts provide as follows:

268.—(2) The following rules apply for determining who is liable to pay statutory accident 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. . . .

(4) If, under subparagraph i or iii of paragraph 1 . . . a person has recourse against more than one insurer for the payment of statutory accident 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.

(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.

(5.2) If there is more than one insurer against which a person may claim benefits under subsection (5) and the person was, at the time of the incident, an occupant of an automobile in respect of which the person is the named insured or the spouse or a dependant of the named insured, the person shall claim statutory accident benefits against the insurer of the automobile in which the person was an occupant.

The arguments are similar to the ones made in the Adabi-Ghomi and Addai-Agyekum appeals. Progressive contends that Mr. Aujla is excluded from coverage under its policy because he was driving a heavy commercial truck at the time of the accident. In the alternative, it submits that he is a named insured under the Old Republic policy because the truck was made available for his regular use. Because he was an occupant of that vehicle at the time of the accident, section 268(5.2) requires him to claim accident benefits under that policy.

A. Is Mr. Aujla insured under the Progressive policy?

Like the earlier regulation ("the Schedule”), the SABS - 1994 defines "insured automobile" and "insured person." However, the definitions are different. The SABS - 1994 provides as follows:

1. In this Regulation,

"insured automobile", in respect of a particular motor vehicle liability policy, means any automobile covered by the policy;

"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, or

(ii) is not involved in an accident but suffers psychological or mental injury as a result of an accident in or outside of Ontario that results in a physical injury to his or her spouse, child, grandchild, parent, grandparent, brother, sister, dependant or spouse's dependant,

(b) in respect of accidents in Ontario, a person who is involved in an accident involving the insured automobile, or

(c) in respect of accidents outside Ontario, a person who is an occupant of the insured automobile and who is a resident of Ontario or was a resident of Ontario at some point during the sixty days before the accident;

[emphasis added]

In my opinion, these definitions emphasize the distinction between coverage following the automobile and coverage following the person. A broad range of people is insured if they are injured in an accident involving an automobile insured under the policy. Certain people are given additional coverage. The named insured, drivers listed in the policy, the spouse of the named insured and any dependant of the named insured or spouse are insured for accidents involving "another automobile." Even if they are not personally involved in an accident, they are insured if they suffer psychological or mental injury as a result of an accident causing physical injury to a family member.

The policy simply reinforces the definition of "insured person" in the SABS - 1994:

4.1 Who is Covered

For the purposes of section 4, insured persons are defined in the Statutory Accident Benefits Schedule. In addition, insured persons also includes any person who is injured or killed in an automobile accident involving the automobile and is not the named insured, or the spouse or dependant of a named insured, under any other motor vehicle liability policy, and is not covered under the policy of an automobile in which they were an occupant or which struck them.

Part 2 of the policy is entitled, "What Automobiles are Covered?" The structure of Part 2 is similar to the definition of "the automobile" in section 5.2.2 of the predecessor Schedule. The policy not only covers the described automobile, but also "newly acquired automobiles" (s.2.2.1), "temporary substitute automobile" (s.2.2.2), "other automobiles" (s.2.2.3) and "trailers" (s.2.2.4).

Progressive relies on the definition of "other automobiles," the relevant part of which states:

2.2.3 Other Automobiles

Automobiles, other than a described automobile, are also covered when driven by you, or your spouse who lives with you. . . .

Special Conditions: For other automobiles to be covered, the following conditions apply:

1. Both the other automobile and a described automobile must not weigh more than 4,500 kilograms (gross vehicle weight).

4. The other automobile is not being used to carry paying passengers or to make commercial deliveries at the time of any loss.

Progressive submits that Mr. Aujla is not an "insured person" as defined in the SABS - 1994 because the accident did not involve the insured automobile or another automobile within Part 2 of the policy. The problem with this argument is the same as the "any other automobile" argument in the Adabi-Ghomi appeal. Section 2.2.3 of the policy is not a general definition of "another automobile." It is part of the description of what vehicles are covered. Therefore, it limits coverage following the vehicle, but not the coverage provided in the SABS - 1994 that follows the person.

Due to the restrictions in section 2.2.3, the truck Mr. Aujla was driving is not an insured automobile under the Progressive policy. However, Mr. Aujla is not claiming that he was injured in an accident involving the insured automobile. He claims that he is an "insured person" under paragraph (a)(i) of the definition in the SABS - 1994 because he was involved in an accident involving "another automobile." This is an undefined term that, in my view, must be given its ordinary meaning. It follows that Mr. Aujla is an "insured person" under the Progressive policy.

B. Is Mr. Aujla a named insured under the Old Republic policy?

This submission is similar to the "as if a named insured" argument raised in the Adabi-Ghomi appeal. Progressive claims that the SABS-1994 deems Mr. Aujla to be a named insured under the Old Republic policy because the vehicle insured under that policy - the truck - was made available for his regular use. This would make him a named insured under both policies. However, because he was in the truck at the time of the accident, section 268(5.2) would require him to claim accident benefits under the Old Republic policy.

Progressive relies on the following section of the SABS - 1994:

91.-(1) 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, unincorporated association, partnership, sole proprietorship or other entity, or an insured automobile is rented to an individual who is living and ordinarily present in Ontario, the individual shall be deemed for the purpose of this Regulation to be the named insured.

I agree with the arbitrator that this section has no different effect than section 3(1) of the Schedule. It deems Mr. Aujla to be a named insured "for the purpose of this Regulation." This has a number of consequences, including providing coverage under the Old Republic policy to his spouse and dependants. I am not persuaded, however, that it affects the priority rules in section 268(2) of the Act.

Progressive also refers to section 88(2) of the SABS - 1994 in support of its position:

88.-(2) Benefits payable under this Regulation in respect of an insured person shall be paid by the insurer who is liable to pay under subsection 268(2) of the Insurance Act.

It is not clear how this section helps Progressive's argument. In my opinion, it confirms that insurer priority is determined according to the Act, not the Schedule.

Effective January 1, 1995, section 91 was amended to include the following provision:

91.— (4) Subject to subsection (7), 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, unincorporated association, partnership, sole proprietorship or other entity, or if an insured automobile is rented for a period of more than 30 days to an individual who is living and ordinarily present in Ontario, the individual shall be deemed to be the named insured under the policy insuring the automobile for the purpose of payment of the statutory accident benefits set out in this Regulation.

[emphasis added]

This wording is significantly different and may achieve the result Progressive is seeking in this case. However, it only applies to accidents occurring on or after January 1, 1995.

For these reasons, I agee with the arbitrator's conclusion that Progressive is responsible for paying accident benefits to Mr. Aujla.

October 27, 1997

David R. Draper

Director’s Delegate

Date

1Adabi-Ghomi and Allstate Insurance Company of Canada and Wellington Insurance Company, (October 27, 1997, OIC P96-00065); Addai-Agekum and Citadel Insurance and Citadel General Insurance Company, (October 27, 1997, OIC P96-00013); and Alfred and Allstate Insurance Company of Canada and State Farm Mutual Automobile Insurance Company, (October 27, 1997, OIC P96-00015).