Neutral Citation: 2001 ONFSCDRS 4
FSCO A00-000607
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
LOUIS NWAKWESI
Applicant
and
SECURITY NATIONAL INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
Tanja Wacyk
Heard:
December 6, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.9
Appearances:
Alexander Mazin for Mr. Nwakwesi
Aldo Picchetti for Security National Insurance Company
Issues:
The Applicant, Louis Nwakwesi, was injured in a motor vehicle accident on June 11, 1999. He applied for and was denied statutory accident benefits from Security National Insurance Company ("Security National"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Nwakwesi applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The parties agreed that a preliminary issue be determined prior to the full arbitration hearing.
Preliminary Issue:
- Is Security National relieved from payment of income replacement benefits because Mr. Nwakwesi ought reasonably to have known that the vehicle he was operating was not insured under a motor vehicle liability policy, pursuant to subsection 30.(1)(a) of the Schedule?
Result:
- Security National is not relieved from payment of income replacement benefits because Mr. Nwakwesi ought reasonably to have known that the vehicle he was operating was not insured under a motor vehicle liability policy.
EVIDENCE:
The 1991 BMW car driven by Mr. Nwakwesi when he was involved in the accident was owned by Dorett Nwakwesi, Mr. Nwakwesi's wife.
Security National called only one witness, Cecelia D. Subryan, Technical Consultant with the Insurer.2 In that capacity, Ms. Subryan operates as an underwriter and manager.
Ms. Subryan testified that Security National holds an insurance policy for Ms. Nwakwesi only, and that as far back as 1994, understood that she and Mr. Nwakwesi were separated, and did not reside in the same household.
It was Ms. Subryan's evidence that at the time of the accident, Ms. Nwakwesi had only one vehicle insured with Security National, and that was a 1989 BMW. The 1991 BMW involved in the accident was not insured with Security National.
Relying on entries in Security National's file for Ms. Nwakwesi,3 Ms. Subryan testified as follows.
Prior to the date of the accident, there had been no contact between Ms. Nwakwesi and Security National since September 1998.
On June 11, 1999, the date of the accident, Security National was contacted by Officer Smith at 2:11 p.m. Officer Smith indicated that Mr. Nwakwesi had been involved in an accident that day, and that he was calling to confirm if Mr. Nwakwesi was listed as a driver on Ms. Nwakwesi's policy. According to Officer Smith, Mr. Nwakwesi had been driving while his license was suspended — which the Officer indicated had been suspended since 1996.
At that time, it appears the Insurer was unaware that it was the 1991 BMW that was involved, as a notation in the file stated "FOLLOW UP ON REPAIRS TO 89 BMW — THIS IS THE CAR INVOLVED."
A second call was received at 2:20 p.m. from Officer Vance who also called to confirm that Mr. Nwakwesi had insurance coverage. Officer Vance indicated that Mr. Nwakwesi's license suspension resulted from overdue fines.
At 7:08 p.m. the same day, Ms. Nwakwesi called in an attempt to add the 1991 BMW to her policy. However, she did not have the V.I.N. number and was to call back.
Ms. Nwakwesi again called at 7:44 p.m. and attempted to add the 1991 BMW to her policy. On the basis of the prior notations, Ms. Nwakwesi was asked about damage to the vehicle. At that time, Ms. Nwakwesi advised that her husband, from whom she was separated, had driven the vehicle that afternoon and had been involved in a collision. Ms. Nwakwesi indicated that she had left a message that afternoon on voicemail to have a broker call her back regarding insuring the 1991 BMW. The note went on to state that Ms. Nwakwesi indicated that her ex-husband believed that the vehicle was already insured and was taking it to a stereo installer when the collision occurred.
Ms. Nwakwesi was advised she could not add the damaged vehicle to her policy.
According to Ms. Subryan, the Insurer always determines who the drivers of an insured vehicle are.
Ms. Subryan testified that in1994, and several times since, Ms. Nwakwesi advised Security National that Mr. Nwakwesi was not a driver on her policy.
Ms. Subryan reviewed an abstract of Mr. Nwakwesi's driving record4 and testified that as he had four convictions for driving while his license was suspended, and two for operating a motor vehicle with no insurance, he would be considered a high risk. That being the case, insurance coverage would likely be available to him only through "Facility" which specializes in such coverage. Ms. Subryan testified that Mr. Nwakwesi had been quoted the price of $7,336.44 for such a policy on September 6, 1996, and had turned it down.
Ms. Subryan further testified that her inquiries had determined that Ms. Nwakwesi had applied for and been granted insurance coverage for the1991 BMW with Belair Direct Insurance ("Belair"). A copy of the Belair file5 revealed that the coverage was effective as of August 8, 1998, and cancelled as of September 23, 1998. Ms. Subryan testified that she was only aware that the cancellation was for "underwriting reasons" but the specific reasons were unknown.
However, examination of the Belair File indicates that the cancellation was the result of "non-disclosure of 9 claims."
Ms. Subryan pointed out that the address Belair had for Ms. Nwakwesi was 220 Creditstone Road, Unit 2, Concord — which further evidence would show is now Mr. Nwakwesi's address.
Ms. Subryan also testified that at one time, Ms. Nwakwesi had resisted disclosing her home address to Security National. However, on August 27, 1997, there was an entry on her file that although she was "very reluctant" to give a home address, Ms. Nwakwesi "finaly"(sic) stated that her home address is 220 Creditstone Rd., Concord, Ontario. Ms. Nwakwesi did not know the postal code for the Creditstone address.
However, Ms. Subryan also testified that as of 1997, Security National understood Ms. Nwakwesi's address to be 27 Massey Grove Crescent, Toronto, and that all her correspondence had been sent there. It was her evidence that Mr. Nwakwesi had been called in August 2000, and he had confirmed this was Ms. Nwakwesi's home address.
In cross-examination, Ms. Subryan testified that approximately two weeks prior to the hearing Ms. Nwakwesi had told her that she had "felt" the 1991 BMW was insured, but was uncertain whether it was with Belair or Security National. However, Ms. Subryan also pointed out that Ms. Nwakwesi had attempted to insure the car on the day of the accident.
Mr. Nwakwesi testified that he was "not at all aware" that the 1991 BMW he was driving at the time of the accident was not insured.
It was his evidence that he and his wife had been separated since 1989 — although he had been seeking a reconciliation since. He testified that they are still friendly but not "intimate," although they have a 3½- year-old-child together. He testified that he did not know the details of his wife's life and refused to indicate how often they see each other or he sees his child.
Mr. Nwakwesi testified that his wife had lived at his current address at 220 Creditstone Road, Unit 2, Concord, until 1995 — at which time she purchased a house. As he was looking for accommodation at the time, he moved into that address. It is an apartment over a store. Mr. Nwakwesi testified that he and his wife never lived at the 220 Creditstone Road address at the same time.
According to Mr. Nwakwesi, his wife still uses that address as a mailing address on occasion. His evidence in this regard was rather vague. At one point he suggested this was because she was not getting her mail at her home address. At another point, he suggested that it was because she had failed to notify everyone of her change of address.
Mr. Nwakwesi testified that following the accident on June 11, 1999, he called his wife and asked her to notify the insurance company — and that it was only 2 to3 days later that she told him the car was not insured.
Mr. Nwakwesi also testified he was "100% sure" that the vehicle was insured as he had seen a "slip for Belair" in the glove box "in the past" — but that the glove box was locked at the time of the accident.
However, Mr. Nwakwesi later also testified that his wife had told him that she was insured with Monnex — and that he had no reason to believe otherwise. He testified that he had introduced her to Monnex/Security National, and advised her to stay with them because of their rates— as she was inclined to call other insurers for estimates in response to advertisements.
In cross-examination, Mr. Nwakwesi testified that he was driving the car because his wife had asked him to have the stereo in the car repaired. His nephew had picked him up and given him the keys to the car.
According to Mr. Nwakwesi, it had also been his intention to use the car for some personal matters. One of these was to determine why he had not yet received his permanent driver's license. Mr. Nwakwesi testified that he had paid all his outstanding fines on May 11, 1999, and had a letter indicating his license had been reinstated and would be returned to him in four days' time. However, this had not happened.
When Mr. Nwakwesi was shown the abstract of his driving record, 6he indicated he had not seen it before. He denied having been convicted of driving while his license was under suspension and indicated that he had a lawsuit underway to clarify matters. He testified that he had been unaware of the convictions and suggested they had happened "in absentia." It was his evidence that he only became aware of what had happened when he received notice that his license was suspended. As a result, he paid the outstanding charges to have his license reinstated.
Mr. Nwakwesi testified that he did not know how many cars Ms. Nwakwesi owned. It was also his evidence that he could not recall if he had seen the 1991 BMW before the day of the accident, but that day was the first time he had driven it.
When it was brought to his attention that this was inconsistent with his evidence-in-chief that he had seen a slip for Belair in the glove box of the car "in the past," Mr. Nwakwesi appeared to change his evidence.
He testified that he had first seen the slip the morning of the accident, and that he had opened the glove box when he got into the vehicle in order to verify that it was insured. Seeing the slip in the glove box, he slammed the door shut. However, as a result of the accident he was not able to get the glove box open as it had "seized" shut. Mr. Nwakwesi testified that consequently, he was not able to provide the slip to the investigating officers. At a subsequent point in the cross-examination, he testified that his driver's license was inside the glove box as well.
Mr. Nwakwesi testified that he knew it was important to determine if he was driving an insured vehicle "because it is the law," and because he has had his license suspended for driving without insurance in the past. He testified that as a result, whenever he drives a car, he confirms it is insured.
However, Mr. Nwakwesi then testified that he did not ask his wife if the car was insured when she asked him to deal with the stereo, because he knew she was a responsible person and would have insurance. He testified that he opened the glove box "automatically" — not because he thought she may not have insurance.
When asked why he had not produced the slip or document from Belair, he testified that his wife had it, and that it had been produced to "everyone."
When asked why his wife had called Security National when they thought the car was insured with Belair, Mr. Nwakwesi testified that while his wife had told him she had called to get insurance that day, he could not say on which car.
Mr. Nwakwesi denied that, as suggested by counsel for Security National, he and his wife had tried to insure the 1991 BMW with Belair in her name — but for his use, and that was why Belair was given his address as hers.
Mr. Nwakwesi also denied having any joint financial dealings with his wife such as joint bank accounts or mortgages. He also denied participating with his wife in the purchase of any insurance for the car.
However, on October 16, 1999, Mr. Nwakwesi had given the following statement regarding the accident:
I was under the impression that I was driving with valid insurance. We were paying by preauthorized monthly payments. I don't know what our monthy (sic) payment amount was. [emphasis added]
When confronted with the statement, Mr. Nwakwesi conceded that "we" was a reference to his wife and himself. He again indicated that he "knew" his wife had insurance because he had seen the slip in the glove box. Although Mr. Nwakwesi had earlier testified that his wife had the slip, at this point, he indicated that his lawyer had it.
When asked why he had not produced bank documents supporting the pre-authorized payments, Mr. Nwakwesi testified that they were at the Bank and were ready to be picked-up, but that he had just been advised of this "at about 5 p.m. yesterday."
At that point, Mr. Nwakwesi again indicated that he had thought the insurer was Monnex, but that after the accident, Ms. Nwakwesi told him that it was with Belair. However, he appeared to concede that no attempts were underway to pursue Belair with regard to accident benefits.
ANALYSIS AND CONCLUSION:
Mr. Nwakwesi appeared to fashion his evidence to show that he had confirmed the 1991 BMW he was driving was insured. I don't believe him. I found his evidence inconsistent, self-serving and incredible.
However, Security National bears the onus of showing that the facts in this case bring Mr. Nwakwesi within the parameters of subsection 30.(1)(a) of the Schedule. The fact I have determined Mr. Nwakwesi's evidence is not believable does not determine the matter.
Subsection 30.(1) states as follows:
30.(1) The insurer is not required to pay an income replacement benefit, a non-earner benefit or a benefit under section 20, 21 or 22 in respect of a person who was the driver of an automobile at the time of the accident,
(a) if the driver knew or ought reasonably to have known that he or she was operating the automobile while it was not insured under a motor vehicle liability policy.
Counsel for Security National indicated that the Insurer was not attempting to prove that Mr. Nwakwesi "knew" he was driving an uninsured car — as it is difficult to prove what anyone "knows."
However, the Insurer undertook to show that Mr. Nwakwesi "ought reasonably to have known" that the 1991 BMW he was driving at the time of the accident was not insured.
That determination must be made by applying an objective standard to the context of the Applicant's specific situation. As stated by Arbitrator Palmer in her decisions in Jacobs and Economical Mutual Insurance Company7 and in Branch and Dominion of Canada General Insurance Company.8
. . . the words "reasonably ought to have known" become the focus. The use of the word "reasonably" implies an objective standard. The words "ought...to have known" are distinguished from the word "knew," which presumes a purely subjective finding.
In other words, is the test what an ordinary, rational, sensible and sober person in Peter Jacobs' shoes at the time of the accident "ought reasonably to have known" or is the test what Peter Jacobs, the grossly intoxicated passenger, "ought reasonably to have known"?
I conclude that the use of the word "reasonably" in the phrase "ought reasonably to have known" of section 17(3)(b) of the Schedule means that an individualized inquiry is called for, but only to the extent of the exercise of reason by an ordinary, rational person in the situation of the Applicant.
Although Arbitrator Palmer was dealing with legislation that preceded the existing Schedule,9 the provision at issue was similar to subsection 30.(1). I find the language and intent with regard to the test to be applied in the two provisions to be the same, and adopt her analysis.
Security National argued that given Mr. Nwakwesi's history of convictions, including two for driving without insurance, one would think that he would take extra steps to confirm that any car he drives is insured. While this may be true, the difficulty with this argument is that it addresses what a reasonable person in Mr. Nwakwesi's situation would have done. This is not the same as what a reasonable person should have known given the facts that can be established.
Security National further argued that if, as he claimed, Mr. Nwakwesi did see a document from Belair in the glove compartment of the 1991 BMW, it would have been reasonable that he read it to ensure that the vehicle was insured. Security National also suggested the document might have been a letter terminating coverage.
In my view, that argument suffers from the same shortcoming as the earlier one. It asks me to assume that certain steps were taken which would then lead to some certainty with regard to the insurance status of the vehicle. That is not the test.
Furthermore, I have difficulty accepting Mr. Nwakwesi's evidence that he saw a document from Belair in the glove compartment, as he has failed to produce anything which fits that description — a significant omission given that the alleged document was a key element in his evidence.
In any event, even if one were to accept that Mr. Nwakwesi did see such a document, I find this does not assist Security National. There is no evidence regarding the nature of this phantom document from which to assess what a reasonable person might have concluded from it.
As indicated earlier, I understand the "ought reasonably to have known" test to refer to what a reasonable person, given the information of which the Applicant was aware — could reasonably be expected to understand, or know, from that information. Not what a reasonable person would have done to inform himself/herself.
Security National also relied on the evidence that Mr. Nwakwesi still sees his wife and has a 3½-year-old-child with her to argue that he ought reasonably to have known that the 1991 BMW was not insured. However, I find the simple fact they are still in touch does not create the nexus necessary to establish that he ought reasonably to have known the 1991 BMW was not insured.
Security National pointed out that they did discuss insurance, as Mr. Nwakwesi testified that he told Ms. Nwakwesi to stay with Monnex because of their rates. However, the context for these discussions, when they occurred, the vehicle at issue, or any other details were not disclosed. Consequently, while this evidence at best raises the possibility that lack of insurance for the 1991 BMW was discussed, it is far short of proving, on a balance of probabilities, that this was the case.
Finally, the Insurer maintained that the matter of Ms. Nwakwesi using Mr. Nwakwesi's address when dealing with Belair was not "adequately explained." As a result, Security National argued that evidence, combined with the evidence that insurance for his coverage would have been very expensive, suggested that Mr. Nwakwesi had been trying to purchase insurance with Belair in his wife's name — and that he had been driving the car as early as September 1999.
While an interesting theory, in my view, it is undermined by the fact the same address was given to Security National approximately one year earlier. In any event, I find that the evidence relied upon by the Insurer is insufficient to conclude that such a strategy was being pursued by Mr. Nwakwesi and his wife — let alone that, as a result, Mr. Nwakwesi should reasonably have known that the car was no longer insured approximately nine months later.
The Insurer argued that I should conclude this was the case because the letter of cancellation would have gone to Mr. Nwakwesi's address. However, I could only find Mr. Nwakwesi was aware of the cancellation notice on that basis if there was evidence that Mr. Nwakwesi opened his estranged wife's mail. There was none.
In order for Security National to be relieved from payment of income replacement benefits pursuant to subsection 30.(1)(a), the evidence must show that, at least on a balance of probabilities, an ordinary rational person in Mr. Nwakwesi's situation should have known that the car he was driving was not insured.
At the end of the day there was no evidence, such as notices given, letters sent, or a history of failure to insure on the part of Ms. Nwakwesi, that Mr. Nwakwesi could be shown to be aware of, and upon which I could find that a reasonable person, knowing what Mr. Nwakwesi knew or experienced, would have known the car was not insured.
Consequently, I find there is insufficient evidence for me to make such a finding.
In reaching this determination, I am not unsympathetic to the evidentiary difficulty confronting the Insurer. However, in my view, subsection 30.(1)(a) was put in place predominately to deal with insureds who have let their policies lapse, or had them cancelled, and then subsequently come forward with claims. In such cases, insurers would have a "paper trail" of notices and communications to meet the evidentiary burden.
That being the case, care must be taken to not create a standard which would cast a broad net. The potential result would be the exclusion from benefits of unsuspecting bystanders who have not taken extraordinary steps to assure themselves that liability coverage is in place every time they drive cars owned by others.
EXPENSES:
I leave the issue of expenses to the discretion of the hearing arbitrator.
January 8, 2001
Tanja Wacyk Arbitrator
Date
Neutral Citation: 2001 ONFSCDRS 4
FSCO A00-000607
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
LOUIS NWAKWESI
Applicant
and
HALIFAX INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mr. Nwakwesi is not precluded from qualifying for income replacement benefits because he ought reasonably to have known that the vehicle he was operating was not insured under a motor vehicle liability policy, pursuant to subsection 30.(1)(a) of the Schedule.
January 8, 2001
Tanja Wacyk Arbitrator
Date
1 The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
2 Ms. Subryan is employed by "Meloche Monnex" but testified that that is the brokerage that operates Security National, and that in effect, they are one and the same.
3 Exhibit 2, printout of Insurer's notes.
4 Exhibit 1, Document Brief, tab 2.
5 Exhibit 3, Belair file of Dorett Nwakwesi.
6 Exhibit 1, Document Brief, tab 2.
7 (OIC A-004394, June 16, 1994), p. 8
8 (OIC A-010681, May 10, 1995), pps. 4-5
9 The Statutory Accident Benefits Schedule — Accidents on or after January 1, 1994. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94.