Neutral Citation: 2004 ONFSCDRS 110
FSCO A03-001194
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
CAROL McINTOSH-SMITH
Applicant
and
BELAIR INSURANCE COMPANY INC.
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: John Wilson
Heard: June 14 and 15 and July 14, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances: Ms. McIntosh-Smith appeared on her own behalf. Chris Blom for Belair Insurance Company Inc.
Issues:
The Applicant, Carol McIntosh-Smith, was injured in a motor vehicle accident on January 24, 2000. She applied for statutory accident benefits from Belair Insurance Company Inc. ("Belair"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Ms. McIntosh-Smith applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The preliminary issue is:
- Is Ms. McIntosh-Smith precluded from receiving income replacement benefits pursuant to section 30(2)(a) of the Schedule on the basis of an alleged material misrepresentation that induced the Insurer to enter into a contract of insurance?
Result:
- Ms. McIntosh-Smith is not precluded from receiving income replacement benefits pursuant to section 30(2)(a) of the Schedule on the basis of an alleged material misrepresentation that induced the Insurer to enter into a contract of insurance.
Background
This preliminary issue hearing deals with a simple matter - whether Ms. McIntosh-Smith misled Belair into granting motor vehicle insurance, through a material misrepresentation, and whether her representations to the Insurer bar her from claiming income replacement benefits.
The factual situation is fairly simple as well. Ms. McIntosh-Smith owned a car, a Pontiac Grand-Am. She had, however, an unfortunate propensity to gather traffic tickets, and consequently to lose points, resulting in the suspension of her driver's licence.
Unable to drive or afford insurance which reflected her driving record, Ms. McIntosh-Smith decided upon a scheme that would permit her access to the car for necessary transportation. Her friend Mr. Emerson Hennie would take over the car for the time being and obtain insurance. He would be the driver, and Ms. McIntosh-Smith would be a passenger, from time to time.
The insurance company contacted was Belair Insurance, which operated as Belair Direct, selling motor vehicle insurance directly to the public, over the telephone.
Insurance was arranged, in the name of Emerson Hennie, and the car was put back on the road. Belair delivered a "pink card" to Mr. Hennie as evidence of his policy of insurance. As part of the arrangement, Ms. Mcintosh-Smith paid for the insurance through the means of a direct withdrawal from her bank account. The car remained registered in her name, with the insurance in the name of Emerson Hennie, who was the named, and its seems, actual driver.
Some weeks later, with Mr. Hennie at the wheel, the Grand-Am was involved in a motor vehicle accident. When Ms. Mcintosh-Smith later made a claim for statutory accident benefits arising from this accident, Belair then took notice of the anomalies in the insurance arrangements and notified Ms. Mcintosh-Smith that due to "misrepresentation upon original policy inception," it reserved "all rights under the policy including the right to deny coverage in its entirety."2
The exact effect of this reservation of "all rights under the policy" was spelled out in a letter from Mr. Blom, counsel for Belair, dated December 22, 2003, addressed to the then agent for Ms. Mcintosh-Smith. Mr. Blom stated:
By letter dated February 11, 2000 your client was advised that her claims for accident benefits were denied on the basis of the misrepresentation with respect to the ownership of the vehicle. This termination was delivered under the provisions of s.30 of the Schedule.
Mr. Blom continued:
In this arbitration you claim income replacement benefits. Your client has