Neutral Citation: 1997 ONICDRG 22

OIC A-012681 & A-013811

ONTARIO INSURANCE COMMISSION

BETWEEN:

NORMAN D. SMITH

Applicant

and

GENERAL ACCIDENT ASSURANCE COMPANY OF CANADA

Insurer

AND:

NORMAN D. SMITH

Applicant

and

ALLIANZ INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Issues:

The Applicant, Norman D. Smith, was injured in a motor vehicle accident on August 12, 1992. He applied for and has been receiving statutory accident benefits from Allianz Insurance Company of Canada ("Allianz") under Ontario Regulation 672.¹ Mr. Smith also applied for statutory accident benefits from General Accident Assurance Company of Canada ("General Accident"). General Accident refused to pay Mr. Smith any benefits, on the basis that Mr. Smith had claimed and received benefits from Allianz. Allianz contends that while it has been paying Mr. Smith benefits, Mr. Smith elected to claim benefits from General Accident. The parties were unable to resolve their disputes through mediation, and Mr. Smith applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended ("the Act").

The issues in this hearing are:

1. Does Ontario Regulation 283/95 apply to this case, and does the Ontario Insurance Commission have jurisdiction to resolve this dispute?

2. If the Ontario Insurance Commission has jurisdiction, which insurer, Allianz or General Accident, is required to pay statutory accident benefits to which Mr. Smith is entitled?

No claim was made for expenses incurred in the proceeding.

Result:

1. Ontario Regulation 283/95 does not apply in this case, and the Ontario Insurance Commission has jurisdiction to resolve this dispute.

2. Allianz is required to pay any statutory accident benefits to which Mr. Smith is entitled.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on February 6 and 7, 1996 before me, Shemin Manji, Arbitrator. I also received written submissions dated March 28, 1996 and April 26, 1996 from Allianz and General Accident.

Present at the Hearing:

Allianz's Harry P. Brown Representative Barrister and Solicitor

General Accident's Lee Samis Representative: Barrister and Solicitor

Mr. Smith was given notice of the hearing but did not attend (except as a witness)

The proceedings were recorded by Mr. Robert Dudley of Victory Verbatim.

Witnesses: Mr. Robert Eugene Kipping Ms. Laura Smith Mr. John Reynolds Ms. Isobel Hunter Mr. Norman Dean Smith

Exhibits:

Exhibits entered into evidence and other documents on the record are listed in an appendix to the decision.

Reasons for Decision:

Section 268 of the Act sets out rules for determining which insurer is liable to pay for statutory accident benefits. In some circumstances, section 268 requires a specific insurer to pay benefits. In other circumstances, a claimant may have a choice between several policies providing accident benefit coverage. Prior to May 27, 1995, disputes between insurers could be resolved through the dispute resolution process at the OIC with the cooperation of an applicant. On May 27, 1995, Ontario Regulation 283/95 made under the Act, came into force.² This Regulation outlines a process for settling disputes between insurers when it is unclear which company is liable to pay benefits. The Regulation requires that disputes between insurers about which insurer is required to pay statutory accident benefits be referred to private arbitration under the Arbitration Act, 1991.

This application for arbitration involves a dispute between two insurers concerning which insurer is liable to pay statutory accident benefits to Mr. Smith. Mr. Smith's entitlement to statutory accident benefits or the amount of the benefits is not in dispute. Therefore, before I can determine which insurer is required to pay statutory accident benefits to Mr. Smith, I must consider whether Ontario Regulation 283/95 applies to this dispute. If it does, I have no authority to hear and determine this dispute.³

a) Does O. Reg. 283/95 apply in this case?

(i) Background facts:

Mr. Smith was seriously injured in a motor vehicle accident on August 12, 1992. He was driving a 1990 Plymouth Voyager mini-van at the time of the accident when he lost control of the vehicle and collided with a parked 1977 Ford pickup.⁴ The van was owned by Mr. Smith's employer, C.E. Jamieson & Company Limited, and insured under a commercial fleet policy with General Accident.⁵ The van had been provided to Mr. Smith by his employer for business and personal use.⁶

At the time of the accident, Mr. Smith personally owned two motor vehicles - a Volvo station wagon and a Volkswagen Jetta. These vehicles were insured under policies with Allianz. Both policies showed Mr. Smith as a named insured.⁷

The accident was reported to General Accident on August 13, 1992⁸ and to Allianz on August 17, 1992.⁹ An application for accident benefits was submitted on behalf of Mr. Smith to Allianz in November 1992.¹⁰ In December 1992, Allianz approached General Accident with a view to having General Accident accept responsibility for the claim or, alternatively, negotiating an agreement with General Accident to split the costs of the claim.¹¹ General Accident refused to accept responsibility¹² but suggested that the dispute be resolved through arbitration.¹³

Subsequent to December 1992, Allianz continued with its efforts to have General Accident accept full or partial responsibility for Mr. Smith's claim.¹⁴ In April 1994, Mr. Smith submitted an application for accident benefits to General Accident.¹⁵ After his application was denied, Mr. Smith and Allianz applied for mediation claiming that General Accident should pay, not Allianz. Mediation was conducted from October 5, 1994 to November 25, 1994. Mediation failed and a Report of Mediator was issued on November 25, 1994.¹⁶ Mr. Smith applied for the appointment of an arbitrator on December 28, 1994 and February 17, 1995.¹⁷

(ii) Analysis

(a) Ontario Regulation 283/95

The full text of Regulation 283/95 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 where it believes it is not required to pay benefits under section 268 of the Act. The first insurer is responsible for paying any benefits to which the insured person may be entitled.¹⁸ However, the Regulation outlines a process whereby the first insurer may dispute its obligation to pay benefits under section 268 of the Act. And, 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, 1991.¹⁹

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 under section 268.²⁰

The first insurer must also notify the insured person that it is disputing its obligation to pay benefits. The insured person's right to participate is contingent upon his or her receiving such a notice. Section 4 of the Regulation requires that the notice must be given using a form approved by the Commissioner. Once the insured person has received such a notice, section 5 of the Regulation 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.²¹

Last but not least, section 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 3.²²

In this case, Allianz was the first insurer to receive an application for benefits from Mr. Smith. Allianz received the application for benefits in November 1992.

Allianz submits that on a reasonable construction of Ontario Regulation 283/95, it cannot apply to the dispute in this case or any other dispute which arose before the Regulation came into force because:

...the procedural requirements which it imposes, and which are pre-requisites for an insurer to dispute its obligations to pay benefits under Section 268 of the Insurance Act, and in fact for an insured person to take part in the proceedings to determine which of two or more insurers should be liable for paying benefits to him or her, could not have been anticipated prior to its coming [into] force. Neither Allianz Insurance Company of Canada nor Norman Smith, could have, as of May 27, 1995, complied with the procedural requirements of Regulation 283/95 regarding notice. For instance, there was no approved form for providing the notice required by s. 3 of the Regulation, as prescribed by s. 4.²³

General Accident agrees with Allianz's position that Ontario Regulation 283/95 does not apply in this particular case. It submits that if the Regulation applies to disputes which arose prior to its coming into force, then the possibility exists that an insurer will be denied access to the dispute resolution process mandated under the Regulation because of non-compliance with its requirements.

I agree with the parties that Ontario Regulation 283/95 does not apply in this particular case. In my opinion, Ontario Regulation 283/95 applies only to disputes where the applications for accident benefits were received by first insurers after May 27, 1995, including accidents before that date. My opinion is based on a review of the Regulation and the law relating to the temporal operation and application of legislation.

(b) Law relating to the temporal operation and application of legislation

The general common law rule of construction is that legislation (including regulations and other forms of delegated legislation) is presumed only to apply prospectively. It 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.²⁴

Even where it is clear that legislation is meant to have a retroactive application, the extent of the retroactivity must be minimized.²⁵

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. ²⁶

There is also a presumption that legislation (including regulations and other forms of delegated 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.²⁷The 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.²⁸

A regulation or other form of delegated legislation that "...purports to have retroactive application or to interfere with vested rights is presumed to be invalid."²⁹

Procedural provisions are presumed to apply immediately to on-going 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.³⁰ (Emphasis added)

This presumption is partly codified in sections 14(2)(b) and (c) of the Interpretation Act, R.S.O. 1990, c.I.11.

(c) Application of the law to the circumstances of this case

The only section of the Regulation which appears to specifically address the temporal operation and application of the Regulation is section 1. It provides as follows:

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. (Emphasis added)

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 prior to and after May 27, 1995.

It is not clear from the words of the Regulation whether it applies to all existing disputes at the time it came into force, or only future disputes. It could be argued that the use of the word "shall" in section 1 indicates that the Regulation applies to future disputes rather than disputes before the Regulation came into force. Otherwise, the language that would have been used would have been as follows: "(a)ll disputes as to which insurer is required to pay benefits under section 268... are to be settled in accordance with this Regulation." On the other hand, the word may have nothing to do with the tense; its only function may be to indicate that the provision was meant to be imperative.

Similarly, one would wish to avoid attaching inappropriate significance to the tenses of verbs used in other sections of the Regulation³¹ because, as is pointed out in Driedger On The Construction of Statutes, legislative drafters use the present tense, in keeping with the rule that a statute is always speaking.³²

I agree with the parties that the application of the Regulation to the facts of this case would interfere with substantive rights and produce unjust results. Specifically, the consequence of applying the Regulation to the facts of this case, where the completed application for benefits was received by Allianz (the "first insurer") prior to February 27, 1995 (90 days prior to May 27, 1995) would be to extinguish the substantive rights of Allianz and Norman Smith to dispute Allianz's obligation to pay benefits and to access the dispute resolution process mandated under the Regulation (private arbitration). This is because at the time the Regulation came into force, they had not complied with the procedural requirements imposed by the Regulation, including the time limits in sections 3, 4, 5 and 7. But there is no way that Allianz and Mr. Smith could have complied with these requirements. Prior to May 27, 1995 neither of them was aware of these requirements, nor could they have anticipated them. They arranged their affairs in accordance with the law as it existed at the time. The law at the time did not require that Allianz give General Accident written notice that it was disputing its obligation to pay benefits within 90 days of its receipt of the application for accident benefits from Mr. Smith. And, at that time Allianz had the right to dispute its obligation to pay benefits through the dispute resolution process of the OIC (with Mr. Smith's cooperation) or, alternatively, by way of issuance of a statement of claim in the Ontario Court (General Division).³³

It is proper to assume that the drafters of the Regulation knew that existing disputes would need to be resolved after the effective date of the Regulation, and that, in the bulk of these disputes the first insurers would not be able to meet the procedural requirements set out in the Regulation. Only a first insurer that received an application for benefits after February 27, 1995 could meet the procedural requirements. Even then, a first insurer that received an application for benefits between February 27, 1995 and May 27, 1995 would be deprived of the full 90 day period in section 3 of the Regulation to conduct the investigations necessary to determine if another insurer was liable.

If the drafters of the Regulation had intended to change the state of the law as it was before the Regulation came into effect and to affect existing substantive rights, they would surely have worded the Regulation in such a way as to make manifest that intention. In my opinion, the presumptions that legislation is not intended to have retroactive application and that it is not to interfere with vested rights apply in this case.

In Bernicky and Guardian Insurance Company of Canada, July 6, 1994, OIC A-006268, I considered whether section 282(11.1) of the Act, which came into force on January 1, 1994, giving an arbitrator the authority to make an interim award of expenses, applied to on-going proceedings, including those commenced but not completed before its coming into force. I held that it did and that the presumption against retroactive operation of a statute did not apply. Although section 282(11.1) of the Act provided an applicant with a right in the present and future that he or she did not enjoy in the past and correspondingly imposed an obligation on an insurer in the present and future that it did not have in the past, it did not operate retroactively in the sense that "...it reached into the past and declared that the law or the rights of parties as of an earlier date shall be taken to be something other than they were as of that earlier date."³⁴ This, however, would be the effect if I were to find that Regulation 283/95 applied to this and other insurer disputes arising prior to May 27, 1995.

The conclusion that the Regulation does not apply to this and other insurer disputes arising prior to May 27, 1995, is consistent with the view expressed by the Commissioner of Insurance, D. Blair Tully. On May 29, 1995, the Commissioner issued Bulletin No. A-5/95 entitled "Priority of payments." In the Bulletin, the Commissioner outlined the circumstances in which the Regulation was enacted and the intent and purpose of the Regulation. On the temporal operation and application of the Regulation, the Commissioner had this to say:

The Regulation outlines a private arbitration process to resolve these inter-company disputes. This means that disputes which arise after the regulation comes into force will no longer be resolved through the dispute resolution system operated by the OIC. (Emphasis added)

(d) Conclusion:

I interpret Regulation 283/95 to apply only to all disputes in which the applications for benefits were received by the first insurers after the date it came into force, including accidents before that date, i.e., May 27, 1995. Therefore, the Regulation does not apply to the dispute between Allianz and General Accident.

Since I have determined that the Regulation does not apply to the dispute between Allianz and General Accident, this dispute may be resolved through the dispute resolution process of the OIC, and I have authority to hear and determine this matter.

(b) Who is required to pay benefits under s. 268?

I must determine which insurer, Allianz or General Accident, is required to pay accident benefits under section 268 of the Act. The parties do not wish me to consider whether section 3(1) of the Schedule puts Mr. Smith in the position of a named insured for the purpose of the election provided under section 268(5) of the Act (as it read at the time of the accident). They have asked me instead to assume that it does, and that they are insurers of equal priority under section 268(5). The specific issue I have been asked to address is whether Mr. Smith made an election under section 268(5) and, if so, what was his election? At the time of the accident, section 268(5) of the Act provided as follows:

(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 No-Fault Benefits Schedule, of a named insured, the person shall claim no-fault benefits against the insurer under that policy and, if there is more than one such policy, the person, in his or her discretion, may decide the insurer from which he or she will claim benefits. (Emphasis added)³⁵

Allianz submits that section 268(5) of the Act is clear. It gives Mr. Smith the discretion to decide the insurer from which he will claim benefits. He can make the choice for whatever reason so long as he makes the decision in "a bona fide fashion." Allianz submits that in this case, General Accident has, from the outset, frustrated Mr. Smith's election under section 268(5). It submits that no election was made by Mr. Smith under section 268(5) until April 1994, when he submitted an Application for Accident Benefits to General Accident and chose to claim benefits from General Accident.

General Accident submits that Mr. Smith has elected to claim and receive benefits from Allianz.

(i) Additional Background facts:

Mr. Smith sustained serious injuries in the accident on August 12, 1992. He was taken by ambulance from the scene of the accident to Hotel Dieu Hospital (in Windsor).³⁶ At the hospital, a C.T. Scan taken of his head on the same day revealed severe cerebral trauma, with swelling of both cerebral hemispheres. Bilateral frontal lobe involvement was noted. Mr. Smith also suffered orthopaedic injuries, soft tissue injuries and complications of deep vein thrombosis and severe pseudomonas pneumonia.³⁷ Mr. Smith was in and out of coma for about 12 days following the accident.³⁸ At some point, he was transferred to Windsor Western Hospital and in October 1992, he was transferred to Parkwood Hospital in London for rehabilitation.³⁹

Mr. Smith was not able to take care of any of his financial or business affairs for a considerable time following the accident (until April 1993).⁴⁰ Mr. Smith has two daughters, Julie and Laura. At the time of the accident, Julie Smith was 21 years old and Laura Smith was 19 years old.⁴¹Initially both of his daughters looked after his financial affairs and made decisions for him. Mr. Smith's mental health improved markedly in December 1992, and he appointed his younger daughter, Laura, as his attorney in January 1993.⁴² Mr. Smith revoked the power of attorney that he gave to Laura in April 1993.⁴³

At the time of the accident, Mr. Smith was employed as Vice-President of Operations at C.E. Jamieson & Company Limited ("Jamieson"). It was clear fairly soon following the accident (by December 1992) that Mr. Smith would not likely work again and definitely not in his prior capacity.⁴⁴

On August 13, 1992, Mr. Smith's accident was reported by his employer by telephone to Mr. Robert Kipping, an independent broker with Southland Insurance Service, in Tecumseh.⁴⁵ The Jamieson vehicle, which Mr. Smith had been driving at that time of the accident, was insured by General Accident under a policy placed by Southland Insurance Service. Jamieson informed Mr. Kipping that Mr. Smith had been involved in an accident in the company vehicle and that he was in a coma.⁴⁶ Mr. Kipping took a Notice of Loss report over the phone.⁴⁷

On the same day, following his telephone conversation with Jamieson, Mr. Kipping faxed the Notice of Loss report to General Accident.⁴⁸

Mr. Kipping testified that prior to forwarding the Notice of Loss report to General Accident, he did not give any thought to which insurer was required to pay benefits under the Act. He testified that he reported the accident to General Accident because it was the insurer of the damaged vehicle.

On August 17, 1992, after receiving the Notice of Loss form from Mr. Kipping, Ms. Isobel Hunter, an adjuster at General Accident, called Jamieson and discussed the accident, including the damage to the vehicle and collision coverage for the vehicle with the company's Controller, Mr. Bob Dent. Mr. Dent informed Ms. Hunter that the driver of the vehicle was a company employee and that he had been badly injured in the accident.⁴⁹

Ms. Hunter testified that she called Mr. Kipping to advise him that she was handling the claim on the same day after speaking to Mr. Dent. She also wished to determine if Mr. Smith had personal coverage, since he had been injured in the accident. Mr. Kipping informed Ms. Hunter that Mr. Smith had his own automobile insurance placed through Southland Insurance Service with Allianz and he provided her with the policy number. Ms. Hunter told Mr. Kipping that General Accident would look after the damage to the insured vehicle but advised him to report the accident benefits portion of the claim to Allianz.⁵⁰

Ms. Hunter testified that after having determined that Mr. Smith had his own insurance coverage, she did not believe that General Accident had any obligation to contact Mr. Smith or to send to him or his family any forms upon which to make an accident benefits claim. Accordingly, she did not contact Mr. Smith or his family, nor did she send them any accident benefit forms. She testified that there was no contact between General Accident and Mr. Smith or his family until April 1994, when Mr. Smith submitted an application for accident benefits.

Mr. Kipping reported the accident to Allianz immediately following his conversation with Mr. Hunter on August 17, 1992.⁵¹ Shortly after being notified by Mr. Kipping of Mr. Smith's accident, Mr. Ray Fortier, an independent adjuster hired by Allianz, arranged a meeting with Julie Smith. They met on August 21, 1992 and at the meeting Mr. Fortier provided Julie Smith with accident benefit forms.⁵²

On or about November 2, 1992, Julie Smith submitted an Application for Accident Benefits to Allianz, on behalf of her father.⁵³

On December 22, 1992, Allianz sent a letter to Julie Smith. In the letter, Allianz advised her that her father was also "fully insured" under a policy with General Accident and that her father or she, acting as his representative, had the freedom of choosing the policy from which he wished to claim benefits (General Accident or Allianz). Allianz suggested to Julie Smith that she might wish to consult with her legal advisers to determine which policy offered the best set of benefits to her father. The letter to Julie Smith was copied to Ohler, Mingay, Barristers & Solicitors, the law firm that Julie and Laura Smith had retained to assist their father in obtaining insurance benefits.⁵⁴

Also on December 22, 1992, a meeting took place at the offices of Ohler, Mingay between Laura Smith, Mr. Mingay and Mr. Reynolds from Allianz.

Mr. Reynolds testified that up to the time of the meeting of December 22, 1992, Mr. Smith and his representatives had had no opportunity to choose the policy under which to claim accident benefits. He testified that Allianz was not sure of the nature of the coverage that Mr. Smith would be entitled to under the General Accident policy but wanted to make sure that he had an opportunity to investigate and make a choice. Mr. Reynolds testified that at the meeting, he explained to Laura Smith the choice her father had under the legislation and also the benefits to which her father would be entitled under the Allianz policy.

Laura Smith testified that the December 22, 1992 letter from Allianz to her sister was read to her at the meeting (she had not seen the letter before the meeting) and Mr. Reynolds told her that she had a choice. She could either go with Allianz or General Accident.

At the meeting, after the choice and benefits to which her father would be entitled were explained to her, Laura Smith elected, on behalf of her father, to claim accident benefits from Allianz.⁵⁵

Mr. Reynolds testified that notwithstanding Laura Smith's election at the meeting to go with Allianz, she and Mr. Mingay agreed at the meeting to file a claim with General Accident. However, they later changed their minds, and no claim was filed.⁵⁶

In January 1993, Allianz commenced paying accident benefits to Mr. Smith. No payments had been made by Allianz under the policy until January 1993 because no bills had been submitted until then.⁵⁷

(ii) Analysis

Allianz contends that General Accident frustrated Mr. Smith's election until April 1994 by making it clear from the outset that it had no intention of paying accident benefits to him. First of all, when Ms. Hunter received the Notice of Loss form from Mr. Kipping of Southland Insurance Services, notwithstanding the fact that this form indicated that the driver of the motor vehicle had been seriously injured and she was aware that there was a potential accident benefits claim, she decided to "...direct the claim" from General Accident to Allianz. She made no attempt to call or write to Mr. Smith or his family or to send them accident benefit forms.

Allianz submits that even if immediately following the accident Ms. Hunter had a bona fide belief that General Accident was not the primary insurer in this case, subsequently, on December 16, 1992, when she became aware that Allianz was disputing its obligation to pay benefits, she still took no action.

Allianz relies on the arbitration decision in Ready and Progressive Casualty Insurance Company and Ready and Zurich Insurance Company (April 7, 1994), OIC A-005403 ("Ready") in support of its position. In Ready, at the time of the accident Mr. Ready was the driver of a vehicle insured by Zurich, made available to him for his regular use under a lease arrangement. Mr. Ready was also a named insured under a personal use policy with Progressive. After the accident, Mr. Ready approached Progressive about claiming accident benefits. Progressive sent him application for accident benefits forms but refused him benefits before he had a chance to complete and forward the forms. After Mr. Ready was denied benefits by Progressive, he contacted Zurich. The issue in the case was which insurer Mr. Ready had elected to claim benefits from under section 268(5) of the Act, i.e., Progressive or Zurich. Arbitrator Nancy Makepeace found that he had elected to claim benefits from Progressive. She reasoned in part as follows:

The statutory accident benefits scheme was intended to provide for speedy and informal adjustment of claims. It would contravene the remedial character of the legislation to allow Progressive to frustrate Mr. Ready's election under subsection 268(5) simply by denying benefits before Mr. Ready filed a written application form.⁵⁸

I do not agree with Allianz's position that General Accident frustrated Mr. Smith's election under section 268(5) of the Act. I do not find the facts in this case to be analogous to the facts in Ready.

I agree that after General Accident received the Notice of Loss form from Mr. Kipping, it had an obligation to furnish Mr. Smith with accident benefit forms, even though it may have believed that it was not responsible for paying benefits to him under section 268 of the Act and even though it had not received a request for the forms. Section 135 of the Act provides as follows:

135.-(1) An insurer, immediately upon receipt of a request, and in any event not later than sixty days after receipt of notice of loss, shall furnish to the insured or person to whom the insurance money is payable forms upon which to make the proof of loss required under the contract.

(2) An insurer who neglects or refuses to comply with subsection (1) is guilty of an offence...

(3) The furnishing by an insurer of forms to make proof of loss shall not be taken to constitute an admission by the insurer that a valid contract is in force or that the loss in question falls within the insurance provided by the contract. (Emphasis added)

The preponderance of the evidence, including a memorandum from Ms. Hunter to her supervisor, Mr. Jeff Wouters, dated December 18, 1992,⁵⁹ is that the claim was reported by Mr. Kipping to General Accident both as a collision and accident benefits claim. In any event, Ms. Hunter knew, from the Notice of Loss form that she received from Mr. Kipping on August 13, 1992⁶⁰ and from her discussions with Mr. Smith's employer on August 17, 1992,⁶¹ that the occupant of the vehicle insured by General Accident (Mr. Smith) had been seriously injured in the accident, and there was a potential claim for accident benefits. Under these circumstances, section 135 of the Act indicates that she had an obligation to furnish Mr. Smith or his family with forms within 60 days after receiving the Notice of Loss form.

While General Accident's failure to provide Mr. Smith with accident benefit forms, in accordance with section 135 of the Act, may constitute an offence, or reveal an unfair or deceptive business practice,⁶² I find that in this case this did not frustrate Mr. Smith's election under section 268(5) of the Act.

I find that the Application for Accident Benefits which was submitted by Julie Smith to Allianz, on behalf of her father, in November 1992, was not an election under section 268(5) of the Act. Julie Smith did not know at that time that her father had a choice of insurer from which to claim benefits.⁶³ However, I find that at the meeting between Laura Smith, Mr. Mingay and Mr. Reynolds on December 22, 1992, Laura Smith made an election on behalf of her father, under section 268(5). At that time, after being informed of the choice and having the benefit of legal advice, she decided to claim benefits from Allianz.

Laura Smith's and Mr. Mingay's actions subsequent to the meeting confirmed this choice. Neither of them contacted General Accident to claim benefits. Mr. Mingay refused to file a claim with General Accident even when prompted to do so by Mr. Reynolds.⁶⁴

Allianz contends that the decision Laura Smith made on December 22, 1992 was made without her father's authority because she did not have a power of attorney at the time. However, Mr. Reynolds of Allianz raised no questions or concerns about Laura Smith's authority to act on behalf of her father at the meeting on December 22, 1992. In any event, any concerns in respect of Laura Smith's authority to act on behalf of her father were laid to rest in January 1993, when she was given a power of attorney.

Allianz questions the validity of power of attorney given to Laura Smith by Mr. Smith in January 1993 on the basis that Mr. Smith had no ability to take care of his financial or business affairs until April 1993. While the medical documents tendered as evidence at this hearing indicate that Mr. Smith's cognitive and language skills may have been impaired in January 1993, they do not specifically address the issue of his mental capacity to execute a legal document, such as a power of attorney, at that time.⁶⁵ In any event, Mr. Smith confirmed at the arbitration hearing that he had given his daughters full authority to make all of his business or financial decisions for him until April 1993.

In any event, Mr. Smith was capable of taking care of his business or financial affairs from April 1993 onwards. However, he took no action to claim benefits from General Accident until April 1994. During this time, he continued to receive benefits from Allianz.

Mr. Smith testified that he did not claim benefits from General Accident, because until he met with Mr. Reynolds of Allianz in October 1993, he was under the impression that the insurance company that was looking after his claim was the company that insured the company van. He was informed by Mr. Reynolds on October 5, 1993 that this was not the case. Mr. Smith testified that his decision would have been different from Laura's. He would have chosen General Accident, because it was the insurer of the company van that he was driving at the time of the accident.

In my opinion, Mr. Smith should have been aware in April 1993 that he was receiving benefits from Allianz not General Accident. In any event, even after he became aware that he was receiving benefits from Allianz, Mr. Smith took no steps to claim benefits from General Accident until some 6 months later. In these circumstances, I find that he elected to claim benefits under section 268(5) of the Act from Allianz.

Order:

1. Ontario Regulation 283/95 does not apply in this case, and the Ontario Insurance Commission has jurisdiction to resolve this dispute.

2. Allianz shall pay any statutory accident benefits to which Mr. Smith is entitled.

January 30, 1997

Shemin Manji Arbitrator

Date

APPENDIX A - THE RECORD

The following exhibits were entered into evidence at the hearing:

Exhibit 1A Handwritten notes of Mr. Kipping, August 13, 1992

Exhibit 1B Notice of Loss to General Accident (undated)

Exhibit 2 General Accident Adjuster Notice (undated)

Exhibit 3A Motor Vehicle Accident Report of August 12, 1992 and newspaper excerpt (undated)

Exhibit 3B Facsimile slip from Mr. Kipping's office, August 14, 1992

Exhibit 4 Statement of Mr. Bob Kipping dated December 18, 1992 (handwritten & typed)

Exhibit 5 Motor Vehicle Accident Report of August 12, 1992 with note from Ms. Carol Parent (August 14 to August 17, 1992)

Exhibit 6 Application for Accident Benefits dated November 2, 1992

Exhibit 7 Statement of Ms. Laura Smith dated January 7, 1993 (handwritten and typed)

Exhibit 8 Statement of Ms. Laura Smith dated October 6, 1993 (handwritten and typed)

Exhibit 9 Letter dated December 22, 1992 from Allianz to Ms. Julie Smith

Exhibit 10 Statement of Ms. Julie Anne Smith dated October 6, 1993 (handwritten and typed)

Exhibit 11 Allianz claim memos

Exhibit 12 Isobel Hunter's worksheets (August 14, 1992 to January 7, 1993)

Exhibit 13 Memo dated December 18, 1992 from Ms. Hunter to Mr. Jeff Wouters, Claim Manager, General Accident

Exhibit 14 Memo (undated) from Jamieson to Ms. Hunter with facsimile cover sheet dated January 7, 1993

Exhibit 15 Memo dated January 7, 1993 from Ms. Hunter to Mr. Wouters

Exhibit 16 Letter dated April 14, 1994 from Ms. Hunter to Jamieson

Exhibit 17 Letter dated April 25, 1994 from Jamieson to Ms. Hunter

Exhibit 18 Statement of Mr. Norman Smith dated October 5, 1993 (handwritten and typed)

Exhibit 19 Medical and Rehabilitation Reports submitted by Allianz

Other documents on the record were:

Report of Mediator (both insurers), dated November 25, 1994

Applications for Appointment of an Arbitrator dated December 28, 1994 (General Accident) and February 17, 1995 (Allianz)

Responses by Insurer dated February 10, 1995 (Allianz) and February 21, 1995 (General Accident)

Pre-hearing letter (both insurers), dated July 12, 1995

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 14 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 (1) 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 way 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, section 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 Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2This is the date the Regulation would have been effective against all persons who had no actual notice of it, as this was the date it was published in The Ontario Gazette; see Regulations Act, R.S.O. 1990, c.R.21, section 5(3)
3. 3In this case, the parties agree that Ontario Regulation 283/95 does not apply, and I have jurisdiction to hear and determine this dispute. However, in my view, parties cannot agree to give me jurisdiction that I don't have. As a statutory decision maker, I have no inherent jurisdiction. I may only exercise powers which have been granted to me by statute, either expressly or by necessary implication. Thus, I must be satisfied that I have jurisdiction in this matter.
4. 4Exhibit 3A
5. 5Exhibit 4
6. 6Exhibit 14 and Exhibit 17
7. 7Testimony of Mr. Bob Kipping
8. 8Exhibit 1B
9. 9Exhibit 5
10. 10Exhibit 6
11. 11Exhibit 11 - Allianz notes: Entries 24, 28, 31 and 33 and Exhibit 13
12. 12Exhibit 11 - Allianz notes: Entry 31, Exhibit 12 - Notes of Adjuster, Ms. Hunter, dated December 16, 1992 and testimony of Ms. Hunter
13. 13Testimony of John Reynolds
14. 14Testimony of John Reynolds
15. 15Testimony of Ms. Hunter and Ms. Laura Smith and Exhibit 16
16. 16Reports of Mediator (both insurers) dated November 25, 1994
17. 17Application for Appointment of an Arbitrator dated December 28, 1994 (General Accident) and Application for Appointment of an Arbitrator dated February 17, 1995 (Allianz)
18. 18Section 2
19. 19Section 7(1)
20. 20Section 3
21. 21Unless 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.
22. 22Section 7(2)
23. 23Letter from Iacono Brown, Barristers & Solicitors, dated March 28, 1996
24. 24See 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)
25. 25Joe 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
26. 263rd Edition by Ruth Sullivan, Butterworths, 1994, at page 513
27. 27Gustavson Drilling 1975 CanLII 4 (SCC), [1977] 1 S.C.R. 271, at 282
28. 28(1920), 1920 CanLII 8 (SCC), 61 S.C.R. 413 (S.C.C.) at page 417
29. 29Driedger On The Construction of Statutes, at page 551
30. 30Ibid at page 545
31. 31For example, section 2 states "The first insurer that receives a completed application for benefits is responsible ..." indicating that this section and the rights and obligations that flow from this section only apply in respect of disputes where the first insurer received an application for benefits after May 27, 1995.
32. 32at page 541. See also section 4 of the Interpretation Act, R.S.O. 1990, c. which states: "(t)he law shall be considered as always speaking and, where a matter or thing is expressed in the present tense, it is to be applied to the circumstances as they arise, so that effect may be given to each act and every part of it according to its true intent and meaning."
33. 33There may also be problems in trying to impose section 2 of the Regulation after the fact on a first insurer. Section 2 provides that the first insurer 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.
34. 34This definition of a retroactive provision is found in the majority opinion of Mr. Justice Dickson in Gustavson Drilling (1964) Limited v. Canada (Minister of National Revenue) 1975 CanLII 4 (SCC), [1977] 1 S.C.R. 271 at page 279
35. 35Section 268(5) was amended in 1993, c. 10, s. 26(2)
36. 36Exhibit 1A, Exhibit 12
37. 37Exhibit 19
38. 38Exhibit 1B, Exhibit 18
39. 39Testimony of Mr. Smith, Exhibits 13 and 19
40. 40Testimony of Mr. Smith and of Laura Smith. Exhibits 10 and 18
41. 41Exhibit 7
42. 42Exhibit 11 - Allianz notes - Entry 39 (January 21, 1993), Exhibit 8
43. 43Exhibit 8 - Statement of Laura Smith (October 6, 1993)
44. 44Exhibit 11 - Allianz notes - Entry 24 (December 14, 1992) and Exhibit 13
45. 45Exhibit 1A
46. 46Exhibit 4
47. 47Exhibit 1B
48. 48Exhibit 1B and Exhibit 4
49. 49Testimony of Ms. Hunter
50. 50Testimony of Ms. Hunter and Mr. Kipping. Exhibits 12 and 13
51. 51Exhibit 5
52. 52Exhibit 10
53. 53Exhibit 6
54. 54Exhibit 9 and Testimony of Ms. Laura Smith
55. 55Testimony of Laura Smith and John Reynolds. See also Exhibit 8
56. 56Exhibit 11 - Allianz Notes - Entry 45 - dated January 29, 1993
57. 57Exhibit 11 - Allianz Notes - Entries 19 (November 6, 1992) and 43 (January 28, 1993) and Exhibit 13
58. 58Page 8
59. 59Exhibit 13 and testimony of Mr. Kipping
60. 60Exhibit 1B
61. 61Testimony of Ms. Hunter
62. 62Pursuant to s.288 of the Act, the Director of Arbitrations could recommend to the Superintendent of Insurance that the Superintendent investigate the business practices of an insurer if the Director is of the opinion that any arbitration reveals an unfair or deceptive business practice.
63. 63Exhibit 10
64. 64Exhibit 11 - Allianz Notes - Entry 45 - dated January 29, 1993
65. 65Exhibit 19```