Neutral Citation: 1997 ONICDRG 200

OIC A96-000442

ONTARIO INSURANCE COMMISSION

BETWEEN:

LUIS ALBERTO HERRERA

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

AND

LUIS ALBERTO HERRERA

Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA

Insurer

DECISION ON PRELIMINARY ISSUES

Issues:

The Applicant, Luis Alberto Herrera, was involved in a motor vehicle accident on December 1, 1993. He applied for statutory accident benefits from the Wawanesa Mutual Insurance Company ("Wawanesa"), payable under Ontario Regulation 672.¹ Wawanesa refused to pay any benefits on the basis that there was no contract of insurance between it and Mr. Herrera at the time of the accident.² After Wawanesa refused to pay benefits, Mr. Herrera applied for statutory accident benefits from the Guarantee Company of North America ("Guarantee"), the insurer of the other vehicle involved in the accident. Guarantee refused to pay any benefits arguing that Wawanesa was responsible, as the latter had not terminated Mr. Herrera's insurance policy prior to the date of the accident in accordance with the Insurance Act, R.S.O. 1990, c.I.8 as it was prior to the Bill 164 amendments.

The parties were unable to resolve their disputes through mediation, and Mr. Herrera applied for arbitration under the Act.

At arbitration, Guarantee also took the position that Ontario Regulation 283/95 applied to the dispute and in accordance with this Regulation, Wawanesa, as the first insurer who received Mr. Herrera's application for benefit, was obliged to pay benefits to Mr. Herrera.

Ontario Regulation 283/95 requires that disputes between insurers as to which insurer is required to pay statutory accident benefits be referred to private arbitration under the Arbitrations Act, 1991. Therefore, if Ontario Regulation 283/95 applies to this dispute between Wawanesa and Guarantee, then this dispute cannot be resolved through the dispute resolution process at the Ontario Insurance Commission.

The issues in this hearing are:

1. Does Ontario Regulation 283/95 apply to this dispute?

2. If the Regulation does not apply, which insurer is required to pay statutory accident benefits to which Mr. Herrera may be entitled?

Result:

1. Ontario Regulation 283/95 does not apply to this dispute.

2. Wawanesa is required to pay any statutory accident benefits to which Mr. Herrera may be entitled.

Hearing:

The hearing was held by teleconference call, on October 24, 1996, before me, Shemin Manji, Arbitrator. I also received written submissions under cover of letters dated October 18, 1996 and October 23, 1996 from Wawanesa. And, written submissions under cover of letters dated October 22, 1996, October 23, 1996 and November 11, 1996 from Guarantee.

Present at the Hearing:

Wawanesa's Representative:

Steve B. Macaulay Barrister and Solicitor

Guarantee's Representative:

Brian McCall Barrister and Solicitor

Mr. Herrera was given notice of the hearing but did not attend.

Exhibits:

Exhibits entered into evidence and other documents on the record are listed in Appendix "A" to this decision.

Reasons for Decision:

I issued a brief decision by way of letter dated December 10, 1996, with reasons to follow. These are my reasons:

a) Background Facts

On October 26, 1993, Mr. Herrera attended at the offices of Matthews & Associates Insurance Brokers Ltd. (Matthews & Associates) in Peterborough, and completed an Application for Automobile Insurance with Wawanesa dated October 26, 1993.³ In the signed Application, Mr. Herrera indicated that he had no suspensions of licence within wthe previous six years, no convictions arising out of the operation of any automobile within the previous three years and no previous insurance.

Mr. Herrera paid a premium of $661.50 in cash to Matthews & Associates for the insurance coverage. On behalf of Wawanesa, Matthews & Associates issued to Mr. Herrera a Motor Vehicle Liability Insurance Card Inter-Province Certificate of Insurance (pink slip) covering the period October 26, 1993 to November 26, 1993.

Matthews & Associates delivered the Application for Automobile Insurance to Wawanesa along with a cheque in the amount of $661.50 drawn on Matthews and Associates' account.

Upon receiving the Application for Automobile Insurance, Wawanesa conducted a driver's record search of Mr. Herrera on October 29, 1993. The driver's record search revealed that Mr. Herrera had not disclosed a licence suspension and three driving related convictions within the relevant period.⁴ Wawanesa also conducted further investigation which revealed that Mr. Herrera had had a prior automobile insurance policy with Royal Insurance Company of Canada.⁵

On November 2, 1993, Wawanesa advised Matthews & Associates, by facsimile transmission, that Mr. Herrera's Application for Automobile Insurance had been declined for non-disclosure of convictions and prior automobile insurance with Royal Insurance Company of Canada.⁶Wawanesa also advised that a registered letter would be sent to Mr. Herrera and that the Application for Automobile Insurance along with the premium cheque would be returned to Matthews & Associates on that same day.⁷

Wawanesa thereupon sent a letter, dated November 2, 1993, by registered mail to Mr. Herrera, at the address shown on the Application for Automobile Insurance, with a carbon copy to Matthews & Associates. In the letter, Wawanesa informed Mr. Herrera that his Application for Automobile Insurance had been declined for misrepresentation or non-disclosure of facts required by the Application. Wawanesa also informed Mr. Herrera that his Application for Automobile Insurance had been returned to the broker and he was advised to immediately contact the broker regarding alternate arrangements for insurance coverage.⁸

The registered letter from Wawanesa was received by the Peterborough Post Office on or shortly before November 4, 1993. An attempt was made by the Post Office to deliver the registered letter to Mr. Herrera's Peterborough address on November 4, 1993.⁹

Mr. Herrera was subsequently involved in a motor vehicle accident on December 1, 1993 in London, Ontario. Mr. Herrera's vehicle collided with a vehicle insured by Guarantee.

In March 1994, Mr. Herrera applied to Wawanesa for statutory accident benefits as a result of the injuries he allegedly sustained in the accident of December 1, 1993.¹⁰ Wawanesa refused to pay any benefits on the basis that there was no contract of insurance between it and Mr. Herrera at the time of the accident.¹¹

Approximately a year later, in May 1995, Mr. Herrera applied to Guarantee for statutory accident benefits.¹² On August 29, 1995, Guarantee denied benefits on the basis that Wawanesa was the insurer responsible for paying benefits.¹³

(b) Does Ontario Regulation 283/95 apply in this case?

Ontario Regulation 283/95:

Section 268 of the Act sets out the rules for determining which insurer is liable to pay statutory accident benefits. In some circumstances, section 268 indicates which insurer would be responsible for paying benefits. In other circumstances, a claimant may have a choice between several policies. Prior to May 27, 1995, priority disputes between insurers could be resolved through the dispute resolution process at the Ontario Insurance Commission ("OIC").

On May 27, 1995, Ontario Regulation 283/95 made under the Act came into force. The full-text of Regulation 283/95 ("the Regulation") is found in Appendix "B." The Regulation does not permit the insurer who first receives an application for benefits ("the first insurer") to ignore a claim because it believes it is not required to pay benefits under section 268 of the Act. That insurer is responsible for paying any benefits to which the insured person may be entitled pending resolution of the priority dispute.¹⁴

The Regulation imposes requirements which must be met by the first insurer before it can dispute its obligation to pay benefits under section 268 of the Act. Section 3 of the Regulation requires that it must give written notice that it is disputing its obligation to pay benefits within 90 days of receipt of an application for benefits, to every insurer that it claims is required to pay pursuant to section 268.¹⁵

The first insurer must also notify the insured person that it is disputing its obligation to pay benefits. Once the insured person has received such a notice, section 5 imposes requirements which the insured person must meet before he or she can participate in any proceeding to determine which of two or more insurers should pay his or her claim, including advising the first insurer in writing within 14 days whether or not he or she objects to the transfer of the claim to the insurers referred to in the notice.¹⁶

Where the insurers cannot agree as to which insurer is required to pay benefits or where the insured person disagrees with an agreement among insurers about which company should pay the benefits, the Regulation requires that the dispute be resolved through an arbitration under the Arbitration Act, 1991, ¹⁷Section 7 of the Regulation requires that the arbitration under the Arbitration Act, 1991 be initiated within one year from the time the first insurer first gave notice under section 3.¹⁸

Application of Ontario Regulation 283/95 to this case:

In this case, Wawanesa was the first insurer to receive an application for benefits from Mr. Herrera. Wawanesa received the application for benefits in March 1994, some 14 months before the Regulation came into force.

Wawanesa submits that the Regulation does not apply to this dispute over which insurer may be liable to pay accident benefits to Mr. Herrera. It submits that the relevant date for the purpose of determining whether the Regulation applies is the date of the accident. Wawanesa submits that when the accident happened in this case, there was no obligation on the insurer who first received the application for accident benefits to pay benefits and, in the absence of a clear provision in the Regulation stating that it is retroactive, the Regulation cannot apply retroactively to accidents before May 27, 1995.

Guarantee submits that the Regulation does not say that it does not apply to accidents before May 27, 1995. Guarantee submits that on the contrary, the mandatory language in section 1 of the Regulation indicates that it does apply to an accident before May 27, 1995, if the dispute between the insurers arose after May 27, 1995. Section 1 of the Regulation provides:

All disputes as to which insurer is required to pay benefits under section 268 of the Act shall be settled in accordance with this Regulation.

[Emphasis added]

Guarantee submits that in this case there was no dispute between the insurers until August 29, 1995, when Guarantee served its Assessment of Claim Form, notifying Mr. Herrera that he should look to Wawanesa for payment of statutory accident benefits.

Section 1 of the Regulation is the only section in the Regulation which appears to specifically address the temporal operation and application of the Regulation. I agree with Guarantee that this section indicates that the relevant date for the purposes of determining whether the Regulation applies is not the date of the accident because it makes no distinction between disputes arising out of motor vehicle accidents before or after May 27, 1995. However, I do not agree with Guarantee's position that the Regulation applies to all "disputes"¹⁹ which arose after May 27, 1995, based on the law relating to temporal operation and application of legislation and on a review of the Regulation.

The general common law rule of construction is that legislation dealing with substantive rights or liabilities is presumed only to apply prospectively.²⁰ Such legislation is not to be construed as having retrospective or retroactive operation unless such a construction is expressly or by necessary implication required by its language.²¹

Even where it is clear that legislation is meant to have a retroactive application, the extent of the retroactivity must be minimized.²²

The rationale for the rule is explained in Driedger On The Construction of Statutes as follows:

Because a retroactive law applies to past events, its practical effect is to change the law that was applicable to those events at the time they occurred. To change the law governing a matter after it has already passed violates the rule of law. In fact, it makes compliance with the law impossible. ... the fundamental tenet on which the rule of law is built is that in order to comply with the law, or rely on it in a useful way, the subjects of the law have to know in advance what it is. By definition, a retroactive law is unknowable until it is too late.²³

There is also a presumption that legislation is not to be applied in circumstances where its application would interfere with vested rights. This presumption applies whether the legislation is retroactive or prospective.²⁴ The rationale for this rule is explained by Duff J. in Upper Canada College v. Smith:

[the rule is] deeply founded in good sense and strict justice because speaking generally it would not only be widely inconvenient but a flagrant violation of natural justice to deprive people of rights acquired by transactions perfectly valid and regular according to the law of the time.²⁵

Legislation that "... purports to have retroactive application or interfere with vested rights is presumed to be invalid."²⁶

In contrast to provisions dealing with substantive rights and liabilities, procedural provisions are presumed to apply immediately to ongoing proceedings, including those commenced but not completed before its coming into force. A "procedural" provision is defined in Driedger On The Construction of Statutes as follows:

To be considered procedural in the circumstances of a case, a provision must be exclusively procedural; that is, its application to the facts in question must not interfere with any substantive rights or liabilities of the parties or produce other unjust results.

The existence and content of any right to bring an action, to bring an appeal or to seek judicial review, as well as the existence and content of defences and excuses, are considered substantive rather than procedural.²⁷

[Emphasis added]

This presumption is partly codified in subsections 14(2)(b) and (c) of the Interpretation Act, R.S.O. 1990, c.

As noted earlier, in this case, the completed application for benefits was received by Wawanesa (the "first insurer") some 14 months prior to May 27, 1995. Under the Regulation, the time limit for the first insurer to dispute its obligation to pay benefits starts to run when it receives a completed application for benefits²⁸ and not when the other insurer(s) indicates that it is not the proper insurer. Therefore, the effect of applying the Regulation in this case, would be to extinguish the substantive rights of Wawanesa to dispute its obligation to pay benefits and to access the private dispute resolution process mandated under the Regulation,²⁹ as Wawanesa had not complied with the time and other procedural requirements imposed by the Regulation.³⁰However, Wawanesa could not have complied with these requirements, as at the relevant point in time these requirements did not exist.

In my opinion, the presumption that legislation is not intended to have retroactive application or to interfere with vested rights, applies in this case. The application of the Regulation to the facts of this case would interfere with substantive rights and produce an unjust result. I therefore find that the Regulation does not apply to this priority dispute between Wawanesa and Guarantee, and that this dispute may be resolved through the dispute resolution process at the Ontario Insurance Commission.³¹

(b) Who is required to pay benefits?

Wawanesa submits that the failure of Mr. Herrera to disclose his prior convictions and automobile insurance, provided it with grounds to terminate the contract. Wawanesa submits that it terminated the contract of insurance with Mr. Herrera prior to the accident of December 1, 1993, in accordance with the Standard Policy of Insurance and the Act, and, therefore, as Mr. Herrera was not its insured at the time of accident, it is not obliged to respond to Mr. Herrera's benefits claims arising out of the accident.

Guarantee disagrees. Guarantee does not dispute that Wawanesa had grounds to terminate the contract. However, it contends that Wawanesa did not terminate its contract of insurance with Mr. Herrera in accordance with the requirements of statutory condition 12 of section 234 of the Act and, therefore, the contract of insurance between Mr. Herrera and Wawanesa remained in force as of the date of the accident.

As noted by Arbitrator Nancy Makepeace in Byford and Economical Mutual Insurance Company and State Farm Mutual Automobile Ins. Co. And Co-operators General Insurance Company (April 16, 1996), OIC A95-000110 ("Byford"), the combined effect of subsections 237(1) and (6) of the Act is to permit an insurer to decline to issue, or to terminate a policy on certain grounds, one of which is "if the insured has knowingly misrepresented or failed to disclose in an application for insurance any fact required to be stated therein." The Act sets out the statutory terms of an automobile insurance policy, and specifies, in section 234 under statutory condition 12,³² how a policy may be terminated:

234.-(1) Subject to sections 235 and 261,

(a) the conditions set forth in this section are statutory conditions and shall be deemed to be part of every contract and

(b) no variation or omission of or addition to a statutory condition is binding on the insured.

(2) ...

STATUTORY CONDITIONS

In these statutory conditions, unless the context otherwise requires, the word "insured" means a person insured by this contract, whether named or not.

Termination

12.-(1) This contract may be terminated,

(a) by the insurer giving to the insured fifteen days' notice of termination by registered mail or five days' written notice of termination personally delivered;

(b) by the insured at any time on request.

(2) Where this contract is terminated by the insurer,

(a) the insurer shall refund the excess premium actually paid by the insured over the proportionate premium for the expired time, but in no event shall the proportionate premium for the expected time be deemed to be less than any minimum retained premium specified; and

(b) the refund shall accompany the notice unless the premium is subject to adjustment or determination as to the amount, in which case the refund shall be made as soon as practicable.

(3) ...

(4) The refund may be made by money, postal or express company money order or cheque payable at par.

(5) The fifteen days mentioned in clause (1)(a) of this condition commences to run on the day following the receipt of the registered letter at the post office to which it is addressed.

[Emphasis added]

In this case, the parties do not dispute that Wawanesa sent the notice of termination by registered mail to Mr. Herrera's proper address. Nor do they dispute that the notice arrived at the Peterborough post office by November 4, 1993 and that the 15 days allowed by clause (5) of the statutory condition expired on November 19, 1993 or at the latest on November 20, 1993, and consequently eleven days prior to the motor vehicle accident of December 1, 1993.³³ They also do not dispute that the law does not require that it be established that Mr. Herrera actually received the notice.³⁴ Thus, the parties do not dispute that Wawanesa complied with clause (2)(a) of the statutory condition. The parties dispute whether Wawanesa complied clause (2)(b).

Wawanesa submits that it complied with clause (2)(b) by immediately returning the insurance broker's premium cheque to the broker, to be then returned to Mr. Herrera, and by advising Mr. Herrera, in the registered notice of cancellation, to immediately contact his broker "...regarding alternate arrangements for (his) insurance coverage."³⁵

Guarantee disagrees. It submits that pursuant to clause (2)(b), in a case such as this, where the insurer was going to refund the entire premium and the premium was not subject to adjustment, it is mandatory that the premium accompany the notice of termination to the insured person. Guarantee submits it is not sufficient to return the broker's cheque to the broker. Guarantee submits that since in this case the premium cheque did not accompany the notice of termination to Mr. Herrera, Wawanesa did not comply with clause (2)(b) of the statutory condition.

I agree with Guarantee that the notice and return of the premium paid by Mr. Herrera to the broker as set out above does not meet the mandatory requirements of clause (2)(b) of the statutory condition.

Clause (2)(b) requires that the refund accompany the notice of termination to the insured person. The reason for the requirements in statutory condition 12 of section 234 of the Act is "...to prevent an insured person from being unfairly surprised by termination and left without adequate opportunity [or means] to either reinstate the policy or obtain alternate insurance."³⁶ In this case, I heard no evidence that the broker had authority to act as Mr. Herrera's agent or representative for the purpose of receiving the termination notice or refund of the premium. Nor did I hear any evidence that the broker took steps in a timely fashion to ensure that the refund was in Mr. Herrera's hands 15 clear days before the accident. I also heard no evidence as to when Mr. Herrera attended at the broker's offices for the return of the premium.

I find that Wawanesa did not comply with statutory condition 12 in that the refund of the premium did not accompany the notice of termination to Mr. Herrera as required.

Wawanesa submits that even if I find that it did not meet the requirements of statutory condition 12, it is still not liable to pay statutory accident benefits because it only had to comply with the statutory condition if there was a valid contract of insurance at the time of the accident. Wawanesa submits that as Mr. Herrera made material misrepresentations and omissions on his Application for Automobile Insurance, the policy was void ab initio as of the date when his application was made, being October 26, 1993. Thus, it argues that a valid insurance policy never existed between Wawanesa and Mr. Herrera, and, therefore, Mr. Herrera has no claim for statutory accident benefits against Wawanesa.

A number of arbitrators have considered whether a material misrepresentation or omission by an insured person of a fact required to be stated in the Application for Automobile Insurance renders the automobile insurance policy void ab initio. Based on section 233 of the Act, which the arbitrators have read as explicitly protecting the right to statutory accident benefits as set out in the Schedule,³⁷ they have concluded that the material misrepresentation or omission by the insured person does not render the entire policy void ab initio. Section 233 provides:

233.-(1) Where,

(a) an applicant for a contract,

(i) ...

(ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated therein;

(b) ...

(c) ...

a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited.

(2) Subsection (1) does not invalidate such statutory accident benefits as are set out in the Statutory Accident Benefits Schedule.

[Emphasis added]

I agree with these arbitrators. In particular, I agree with Arbitrator Nancy Makepeace in Byford (supra) that subsection 233(1) is a forfeiture provision; it does not render a policy void from inception. In any event, subsection 233(2) says that subsection 233(1) "does not invalidate" statutory accident benefits.³⁸

I also agree with Arbitrator Makepeace that the effect of subsection 233(2) of the Act is that an insurer denying a claim for statutory accident benefits on the basis of misrepresentation or failing to disclose in the application for insurance benefits any fact required to be stated therein must rely on the exclusions set out in section 17 of the Schedule, rather than subsection 233(1) of the Schedule. The exclusions set out in section 17 are quite limited. The exclusion that would apply to misrepresentation, in subsection 17(3) of the Schedule begins "(t)he insurer is not required to pay benefits under subsection 12(1) or 13(1) [weekly benefits]...". By necessary implication, the insurer is required to pay the applicant's otherwise valid claims for medical and rehabilitation benefits, despite the misrepresentation.

Conclusion

I find that the policy of insurance between Mr. Herrera and Wawanesa remained in force on the date of the accident because Wawanesa failed to terminate the policy in accordance with the requirements of the Act. I also find that material misrepresentations and omissions by Mr. Herrera on his Application for Automobile Insurance did not render his entire policy with Wawanesa void ab initio. Therefore, subject to the exclusions that are set out in section 17 of the Schedule, Wawanesa, and not Guarantee, is liable to pay Mr. Herrera statutory accident benefits to which he may be entitled.

Order:

1. Ontario Regulation 283/95 does not apply to this dispute.

2. Wawanesa shall pay any statutory accident benefits to which Mr. Herrera may be entitled.

November 10, 1997

Shemin Manji Arbitrator

Date

APPENDIX A - THE RECORD

The following exhibits were entered into evidence at the hearing:

Exhibit 1

Ontario Application for Automobile Insurance dated October 26, 1993

Exhibit 2

Ontario's Driving Record dated November 1, 1993 re: Ferrer Herrera, Luis, Alberto

Exhibit 3

Fax Cover Sheet from Wawanesa to Matthews Associates (Brokers) dated November 2, 1993

Exhibit 4

Registered letter from Wawanesa to Mr. Herrera dated November 2, 1993

Exhibit 5

Letter from Guarantee to Mr. Juan F. Carranza dated August 29, 1995 and Assessment of Claim By Insurer dated August 29, 1995

Exhibit 6

Motor Vehicle Liability Insurance Card (Pink slip) issued by Matthews and Associates, effective date October 26, 1993. Expiry date November 26, 1993.

Exhibit 7

Form entitled "Articles Delivered" from Canada Post Corporation date: November 4, 1993.

Other documents before the arbitrator were:

Reports of Mediator dated January 5, 1996 (one for each insurer)

Applications for Arbitration (undated) (one for each insurer)

Responses by Insurer dated May 7, 1996 (Guarantee) and May 17, 1996 (Wawanesa)

Pre-hearing letter (both insurers) dated September 23, 1996

Written submissions of Wawanesa under cover of letter dated October 18, 1996 from Mr. Macaulay

Written submissions of Guarantee under cover of letter dated October 22, 1996 from Mr. McCall

Supplementary Written Submissions of Wawanesa under cover of letter dated October 23, 1996

Supplementary Written Submissions of Guarantee under cover of letter dated October 23, 1996

Letter dated November 11, 1996 from Mr. McCall (on behalf of Guarantee)

Decision letter dated December 10, 1996 from Arbitrator Shemin Manji (decisions on preliminary issues)

Letter dated January 8, 1997 from Mr. McCall

APPENDIX B

ONTARIO REGULATION 283/95

made under the

INSURANCE ACT

Made: April 12, 1995

Filed: May 10. 1995

DISPUTES BETWEEN INSURERS

1. All disputes as to which insurer is required to pay benefits under Section 268 of the Act shall be settled in accordance with this Regulation.

2. The first insurer that receives a completed application for benefits is responsible for paying benefits to an insured person pending the resolution of any dispute as to which insurer is required to pay benefits under section 268 of the Act.

3. (1) No insurer may dispute its obligation to pay benefits under section 268 of the Act unless it gives written notice within 90 days of receipt of a completed application for benefits to every insurer who it claims is required to pay under that section.

(2) An insurer may give notice after the 90--day period if,

(a) 90 days was not a sufficient period of time to make a determination that another insurer or insurers is liable under section 268 of the Act; and

(b) the insurer made the reasonable investigations necessary to determine if another insurer was liable within the 90-day, period.

(3) The issue of whether an insurer who has not given notice within 90 days has complied with subsection (2) shall be resolved in an arbitration under section 7.

4. An insurer that gives notice under section 3 shall also give notice to the insured person using a form approved by the Commissioner.

5. (1) An insured person who receives a notice under section 4 shall advise the insurer paying benefits in writing within 14 days whether he or she objects to the transfer of the claim to the insurers referred to in the notice.

(2) If the insured person does not advise the insurer within 14 days that he or she objects to the transfer of the claim, the insured person is not entitled to object to any subsequent agreement or decision to transfer the claim to the insurers referred to in the notice.

(3) An insured person who has given notice of an objection is entitled to participate as a party in any subsequent proceeding to settle the dispute and no agreement between insurers as to which insurer should pay the claim is binding unless the insured person consents to the agreement or 1 4 days have passed since the insured person was notified in writing of an agreement and the insured person has not initiated an arbitration under the Arbitration Act, 1991.

6. The insured person shall provide the insurers with all relevant information needed to determine who is required to pay benefits under section 268 of the Act.

7. (1) If the insurers cannot agree as to who is required to pay benefits or if the insured person disagrees with an agreement among insurers that an insurer other than the insurer selected by the insured person should pay the benefits, the dispute shall be resolved through an arbitration under the Arbitration Act, 1991.

(2) The insurer paying benefits under section 2 any other insurer against whom the obligation to pay benefits is claimed or the insured person who has given notice of an objection to a change in insurers under section 5 may initiate the arbitration but no arbitration may be initiated after one year from the time the insurer paying benefits under section 2 first gives notice under section 3.

8. (1) Except as provided in this Regulation, the Arbitration Act, 1991 applies to an arbitration under this Regulation.

(2) The decisions of an arbitrator made under this Regulation shall be public.

9. (1) Unless otherwise ordered by the arbitrator or agreed to by all the parties before the commencement of the arbitration, the costs of the arbitration for all parties, including the cost of the arbitrator, shall be paid by the unsuccessful parties to the arbitration.

(2) The costs referred to in subsection (I) shall be assessed in accordance with section 56 of the Arbitration Act, 1991.

10. (1) If an insurer who receives notice under section 3 disputes its obligation to pay benefits on the basis that other insurers, excluding the insurer giving notice, have equal or higher priority under section 268 of the Act it shall give notice to the other insurers.

(2) This Regulation applies to the other insurers given notice in the same that it applies to the original insurer given notice under section 3.

(3) The dispute among the insurers shall be resolved in one arbitration.

11. If the Motor Vehicle Accident Claims Fund receives an application for benefits, sections 4 and 5 do not apply and the insured person is not entitled to initiate or participate as a party in an arbitration under section 7.

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 On or Between June 22, 1990 and December 31, 1993. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2Report of Mediator dated January 5, 1996
3. 3Exhibit 1
4. 4Exhibit 2 - Ontario's Driving Record dated November 1, 1993
5. 5Exhibit 3 - Wawanesa Fax Request to Matthews & Associates dated November 2, 1993
6. 6The facsimile transmission to the broker and the letter to Mr. Herrera do not mention the failure of Mr. Herrera to disclose the licence suspension as a specific reason for Wawanesa declining his Application for Insurance
7. 7Exhibit 3
8. 8Exhibit 4
9. 9Exhibit 7 - Canada Post Corporation, Articles delivered, dated November 4, 1993
10. 10I did not receive evidence in respect of the date when Mr. Herrera applied to Wawanesa for statutory accident benefits. However, the submissions of both parties indicate that it was sometime in March 1994.
11. 11Report of Mediator dated January 5, 1996
12. 12Again, I did not receive evidence in respect of the date when Mr. Herrera applied to Guarantee for statutory accident benefits. However, the submissions of both parties indicate that it was sometime in May 1995.
13. 13Exhibit 5 - Letter dated August 29, 1995 to Mr. Juan F. Carranza, Barrister and Solicitor, from Guarantee and Ontario Automobile Insurance Assessment of Claim by Insurer dated August 29, 1995
14. 14Section 2
15. 15Section 3
16. 16Unless the claim has been made against the Motor Vehicle Accident Claims Fund in which case the insured person has no right to participate - see section 11
17. 17Subsection 7(1)
18. 18Subsection 7(1)
19. 19It is Guarantee's position that a dispute does not arise until the other insurer indicates that it is not the proper insurer.
20. 20This includes regulations and other forms of delegated legislation
21. 21See Upper Canada College v. Smith 1920 CanLII 8 (SCC), [1920] 61 S.C.R. 413 (S.C.C.) and Nadeau v. Cook and Superintendent of Insurance 1948 CanLII 214 (AB SCTD), [1948] 2 D.L.R. 783 at page 785 (Alberta Supreme Court)
22. 22Joe Moretta Investments Ltd. v. Ontario (Minister of Housing) (1992), 1992 CanLII 7526 (ON CA), 8 O.R. (3d) 129 (C.A.) (per Goodman J.A. at page 145
23. 233rd Edition by Ruth Sullivan, Butterworths, 1994, at page 513
24. 24Gustavson Drilling 1975 CanLII 4 (SCC), [1977] 1 S.C.R. 271, at 282
25. 25(1920), 1920 CanLII 8 (SCC), 61 S.C.R. 413 (S.C.C.) at page 417
26. 26Driedger On The Construction of Statutes, at page 551
27. 27Ibid at page 545
28. 28Section 3
29. 29It does not have access to any other dispute resolution mechanism
30. 30Section 3 requires that the first insurer (here Wawanesa) must give written notice that it is disputing its obligation to pay benefits within 90 days of receipt of the application for benefits to every insurer (here Guarantee) that it claims is required to pay pursuant to section 268 of the Act . Where insurers cannot agree, section 7 requires that the arbitration under the Arbitration Act, 1991 be initiated within one year from the time the first insurer first gave notice under section 3.
31. 31As I stated in Smith and General Accident Assurance Company of Canada and Smith and Allianz Insurance Company of Canada (January 30, 1997), OIC A-012681 & A-013811, which raised the same issue, in my opinion, Ontario Regulation 283/95 only applies to a dispute where the application for accident benefits was received by the first insurer after May 27, 1995, although the accident may have occurred before that date.
32. 32In this decision although I talk about section 234 in the present tense, I am referring to the Act as it was before the Bill 164 amendments because all of the facts which gave rise to the dispute in this case arose before the Bill 164 amendments came into effect. The statutory conditions in section 234 were repealed in Bill 164 and put in Regulation777/93 (no substantive changes were made).
33. 33Letter dated November 11, 1996 from Mr. McCall to the OIC
34. 34The part of clause (2)(a) of the statutory condition dealing with the insurer giving the insured fifteen days' notice of termination by registered mail, has been interpreted in a number of court decisions not to require the insurer to establish that the insured person actually received the notice - See Clapp v. Travellers 'Indemnity Co. 1931 CanLII 150 (ON CA), [1932], 1 D.L.R. 551 (Ontario Court of Appeal), Lumbermens Mutual Casualty Company v. Stone 1955 CanLII 55 (SCC), [1955] S.C.R. 627 (Supreme Court of Canada) and Thompson v. The Dominion of Canada General Insurance Company et al. [1995] I.L.R. 3302 (Ontario Court (General Division))
35. 35Exhibit 4
36. 36Thompson v. The Dominion of Canada General Insurance Company et al. [1995] I.L.R. 3302 (Ontario Court (General Division))
37. 37Byford and Economical Mutual Insurance Company and State Farm Mutual Automobile Insurance Company and Co-operators General Insurance Company (supra), Findlay and Lambton Mutual Insurance Company and General Accident Assurance Company of Canada (February 15, 1995), OIC A-005358 and A-005359 (confirmed on appeal - Lambton Mutual and General Accident and Findlay (December 22, 1995), Appeal Order P-005358 and P-005359) and Aujla and Kingsway General Insurance Company (January 19, 1996), OIC A-015276
38. 38The Application for Automobile Insurance dated October 26, 1993 (Exhibit 1) also says the same thing.