Allstate Insurance Company of Canada v. Hilda Shaw and Belair Insurance Company, 1998 ONFSCDRS 65

Financial Services Commission / Commission des services financiers de l’Ontario

Neutral Citation: 1998 ONFSCDRS 65 Appeal: P97-00042

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALLSTATE INSURANCE COMPANY OF CANADA Appellant

and

HILDA SHAW Respondent

and

BELAIR INSURANCE COMPANY Respondent

Before: Susan Naylor, Director’s Delegate

Counsel: Todd J. McCarthy (for Allstate Insurance) Anthony I. Pribetic (for Hilda Shaw) William P. Dermody (for Belair Insurance)

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 arbitrator’s order dated June 30, 1997 is confirmed.

2. Pursuant to my order dated October 17, 1997, Allstate Insurance Company of Canada must repay Belair Insurance Company the amount of benefits paid by Belair between June 30, 1997 to November 1, 1997.

3. Hilda Shaw is entitled to her appeal expenses to be paid by Allstate Insurance Company of Canada.

October 30, 1998

Susan Naylor Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal is from an arbitrator’s decision about which insurer, Allstate Insurance Company of Canada (“Allstate”) or Belair Insurance Company (“Belair”) is responsible for paying Hilda Shaw’s accident benefits.

On December 31, 1994, Ms. Shaw was struck by a vehicle, insured by Allstate. She did not have her own automobile insurance but was living with Leslie Digby, who did. He insured his vehicle through Belair. The dispute turns on whether Ms. Shaw and Mr. Digby were spouses at the time of the accident.

The relevant rules are set out in the Insurance Act, R.S.O. 1990 c. I-8, as amended by the Insurance Statute Law Amendment Act, 1993, S.O. 1993, c.10, (“the Act”), and the Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996, Reg. 776/93, as amended (“SABS-1994”). Under these rules, if Ms. Shaw and Mr. Digby are spouses, Ms. Shaw is an insured person under Mr. Digby’s policy with Belair, and Belair is responsible for her benefits. Otherwise, Allstate is liable.¹

“Spouse” is defined in s.1 of SABS-1994 to mean:

either of a man and a woman who,

(a) are married to each other,

(b) have together entered into a marriage that is voidable or void, in good faith on the part of the person asserting a right under this Regulation, or

(c) have lived together in a conjugal relationship outside marriage at some point during the previous year and have lived together in a conjugal relationship outside marriage,

(i) continuously for a period of at least one year, or

(ii) in a relationship of some permanence, if they are the natural or adoptive parents of a child or have demonstrated a settled intention to treat a child as a child of their family.

The dispute involves the definition in s. 1 (c) (i), and, in particular, whether Ms. Shaw and Mr. Digby were living in a conjugal relationship.

Both Ms. Shaw and Mr. Digby took the position they are not, and never have been, spouses, as did Belair. The arbitrator agreed with them, and hence the appeal by Allstate. A transcript of the testimony given at the arbitration hearing was filed on appeal.

II. BACKGROUND

The arbitrator extensively canvassed the evidence in his decision. It is unnecessary to provide more than a brief summary here. At the time of the accident, Ms. Shaw was 70 years old. Mr. Digby was 78. They had been living together since August 1983 (more than a decade) when Ms. Shaw and her adult daughter moved into Mr. Digby’s condominium unit. Mr. Digby was then recently divorced and retired. The shared arrangement meant he did not have to live alone as he aged.

The arbitrator concluded that the relationship between Mr. Digby and Ms. Shaw was “far more consistent with a deep-rooted friendship than a relationship that featured the love, affection or companionship of a husband and wife” (p. 17). He looked at a variety of relevant factors identified in the case-law as indicia of a conjugal relationship. These included how the parties saw themselves, how they presented themselves to others and how others saw them. He also considered their living and household arrangements, sexual and personal relations, family and social interaction and financial arrangements.

According to the evidence, Ms. Shaw and Mr. Digby shared a home and much of the routine that goes into running a household. Although they each had their own separate lives, they often accompanied one another to social and family functions. They went on holidays together but each paid their own way. Mr. Digby paid for the common condominium expenses, but otherwise their finances were separate and both were self-supporting. They did not introduce or present themselves to others as spouses, although Mr. Digby reported that they were occasionally referred to as such by acquaintances.

There is little in the documentary records (i.e. tax returns, hospital records, legal documents, etc.) indicative of a spousal relationship. There was evidence that, privately, they made some provision for each other in their wills although they had not discussed this with each other.

Ms. Shaw did not share a bedroom with Mr. Digby. According to the evidence, they did not have a sexual relationship. Ms. Shaw and Mr. Digby denied they were romantically involved. According to their testimony, the relationship was in the nature of a close friendship and mutually advantageous living arrangement. Their evidence was corroborated by Ms. Shaw’s children. The arbitrator accepted this picture as believable and consistent with the preponderance of the evidence.

Allstate called several witnesses in support of its position that Ms. Shaw and Mr. Digby were spouses. However, with one exception, their evidence was at best equivocal. The only person giving affirmative evidence as to Ms. Shaw’s and Mr. Digby’s spousal status was Juliet Beard, the insurance adjuster. Ms. Beard testified that Mr. Digby and Ms. Shaw told her on separate occasions that they were living in a common-law relationship. The arbitrator concluded that Ms. Beard’s notation of this discussion with Mr. Digby was not written contemporaneously but was a conclusion she reached later on. He found her evidence unbelievable, setting out his credibility findings in some detail.

It is clear that an appeals adjudicator should not interfere with the arbitrator’s assessment of the evidence, and particularly credibility findings, unless satisfied that the arbitrator has made a serious mistake. Allstate’s position is that it is not disputing the arbitrator’s findings of fact. It argues the arbitrator erred in law in failing to conclude on the facts as he found them that Ms. Shaw and Mr. Digby were living in a conjugal relationship. For reasons set out below, I disagree. In my view, Allstate’s appeal boils down to a disagreement with the arbitrator’s assessment of the evidence, a matter within his judgement.

III. Findings and Analysis

The Insurance Act and SABS-1994 contain separate definitions of “spouse”. The Act’s definition of common-law spouse in s. 224(1) refers to persons who are “not married to each other and have cohabited continuously for a period of not less than three years”, while SABS-1994 refers to persons “who have lived together in a conjugal relationship outside marriage” for the prescribed periods.

The SABS-1994 definition governs because the dispute involves accident benefits. However, it is not clear to me that much turns on the difference in the language. The terms are used interchangeably. For example, s. 1(1) of the Family Law Act, R.S.O. 1990 c. F-3 defines “cohabit” to mean “to live together in a conjugal relationship, whether inside or outside marriage..” According to the court in Molodowich v. Penttinen (1980), 1980 CanLII 1537 (ON HCJ), 17 R.F.L. (2d) 376 (Ont. Dist. Ct.), “cohabit” and “conjugal” involve “overlapping and interwoven concepts, each word, in a sense, an echo of the other and both an integral and essential element encompassed by the modern day concept of marriage”. Cohabitation has also been described as living together in a “marriage-like” relationship outside marriage”², and living together as husband and wife.³

The general principles set out in family law cases are applicable to accident benefits cases.⁴ In Miron v. Trudel, [1995] S.C.R. 44, Madame Justice L’Heureux -Dubé described the functional goal of the Ontario Standard Automobile Policy as the protection of stable family units by insuring against the economic consequences that may flow from injury to a family member. She identified the policy’s purpose as almost inextricably related to the obligation of mutual support between common law spouses and to the relationship of interdependency on which the obligation is based.

The case-law has developed certain criteria, including both subjective and objective tests, against which to evaluate such relationships.⁵ The most comprehensive and oft-cited listing appears in Molodowich v. Penttinen (supra), which enables an adjudicator to view the relationship as a whole. The arbitrator used the Molodowich approach to structure his analysis.

In my view, the arbitrator correctly articulated the applicable law and adopted an analytical frame-work consistent with the case-law. He carefully and comprehensively evaluated the evidence against the criteria set out in Molodowich. There is no error in his approach.

Allstate argues that the arbitrator failed to take account of the diversity of domestic partnerships warranting legal recognition. It stresses the remedial nature of the scheme and the need for broad coverage. It cautions that finding Ms. Shaw and Mr. Digby not to be spouses might set a dangerous precedent and disqualify someone in an analogous relationship from receiving death benefits in the event of his or her partner’s death.

The case-law reflects that the concept of conjugality accommodates diversity in family forms. Most recently, for example, in M.v.H. (1996), 1996 CanLII 2218 (ON CA), 31 O.R. (3d) 417 (C.A)⁶ and in Kane v. Ontario (Attorney General) (1998) I.L.R. 1-3536 (Gen. Div.) the court accepted that same-sex relationships can meet the elements of conjugality, holding that the statutory definition of spouse in s. 29 of the Family Law Act (in M.v.H.) and s. 224 of the Insurance Act (in Kane) which excluded same-sex couples is contrary to the Canadian Charter of Rights and Freedoms.

Whether two people are living in a conjugal relationship turns on the particular facts in every case. The criteria cannot be applied uniformly to every case. In M.v.H., at page 67, Charron J.A. put it like this:

..the existing jurisprudence makes it clear that couples do not have to fit a singular traditional model in order to demonstrate that their relationship is conjugal within the meaning of the law. The extent to which these different elements of a conjugal heterosexual relationship will be taken into account will vary with the circumstances. In the same way, some factors may take on a greater or lesser significance than others for same sex couples.

Allstate argues that the recognised elements of a spousal relationship may have more or less relevance in certain cases due to socio-economic, cultural, or other factors, including age. It points to the relative importance of comfort and companionship and a lesser emphasis on sexual relations as some couples age. It submits that the arbitrator should have paid more attention to the fact that Ms. Shaw and Mr. Digby enjoyed and relied upon each other’s affection, comfort and companionship and had a reasonable expectation that this supportive relationship would continue in the future.

I do not find that the arbitrator over or underemphasised any particular aspect of conjugality. He considered both objective and subjective factors. Evidence of lack of an intimate relationship was only one aspect of his analysis. Although I agree with Allstate that shared responsibility towards the other’s children is less of a factor where the children are grown-up and have their own lives, the arbitrator did not place much significance on this aspect of their relationship. Important indicators, such as financial interdependency, were also largely absent.

The arbitrator also examined the parties’ subjective intentions. Both Ms. Shaw and Mr. Digby testified that they did not consider themselves to be spouses, or hold themselves out to be in a spousal relationship. The arbitrator found their testimony credible and consistent with the testimony of the other witnesses and with the preponderance of the objective evidence.

Allstate’s submissions urge adoption of a broadened notion of domestic partnership eligible for protection under the Schedule and caution courts and tribunals against “being imprisoned by old fashioned and outdated notions of legal marriage that no longer apply to the various forms of domestic partnerships that now exist and will continue to emerge in the next century.” The views of the individuals involved are not determinative, nor were they treated as such by the arbitrator. However, where both people are consistent in their testimony and found to be credible, their evidence should not be disregarded as Allstate would have it. Unlike many of the cases cited to me which involved a disagreement between individuals as to the nature of their relationship, here neither Mr. Digby nor Ms. Shaw asserted that they were spouses. They had no compelling interest or stake in the outcome.⁷ In the circumstances, it sits somewhat uneasily that it is an outside party, an insurer with a direct interest in the result, asserting spousal status on their behalf.

The facts as found by the arbitrator show Ms. Shaw and Mr. Digby shared a mutually advantageous living arrangement which provided them both with a measure of emotional support and companionship as they aged. The arbitrator held, however, that their relationship, while warm, fell short of a spousal relationship. Determining whether a relationship is conjugal may be complicated because of the diversity of reasons people chose to live together and the fact that those reasons, and the relationship, may change over time. However, there is nothing contradictory in the arbitrator’s findings. While it is possible that another arbitrator might have viewed the evidence somewhat differently, it was this arbitrator’s decision to make. There is nothing in the arbitrator’s legal reasoning or factual findings that warrants intervention on appeal. The appeal is therefore dismissed.

IV. EXPENSES

Ms. Shaw participated in the appeal but only to a limited extent. She is entitled to her appeal expenses, payable by Allstate. Allstate and Belair bear their own appeal expenses.

October 30, 1998

Susan Naylor Director’s Delegate

Date

Footnotes

1. 1The Act, ss. 268(2) 2. i and ii; s. 268(5); SABS-1994, s. 1
2. 2Re Feehan and Atwells (1979), 1979 CanLII 1613 (ON HCJ), 24 O.R. (2d) 248 (Co. Ct.)
3. 3Sanderson v. Russell (1979), 1979 CanLII 2048 (ON CA), 24 O.R. (2d) 429 (Ont C.A.)
4. 4See e.g. Rodrigue and Canadian General Insurance Company (OIC A-005175, August 30, 1995)
5. 5See e.g. Molodowich v. Penttinen (supra), Bellis v. Innes (1980), 1980 CanLII 3813 (BC SC), 21 R.F.L. (2d) 40 (B.C.Co. Ct.);
6. 6Appeal to the Supreme Court of Canada is pending
7. 7C.f., for example, Allstate Insurance Company of Canada and Alfred and State Farm Mutual Automobile Insurance Company, (OIC P96-00015, April 23, 1997) aff ’g (OIC A-009267, November 30, 1995)