Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 49

Appeal P06-00013

Appellant

and

DENISE UDELE PETERS and DIANE ANDREA PETERS

Respondents

Before:

Nancy Makepeace

Representatives:

Grant Black and Catherine A. Temple for Aviva

David J. Gillespie for Denise Peters and Diane Peters

Hearing Date:

October 18, 2006

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal from the arbitrator’s order, dated April 10, 2006, is dismissed with respect to death benefits. Paragraph 1 of the order (death benefit) is confirmed, along with paragraph 2 (interest), and paragraphs 4 and 5 (arbitration expenses).
The appeal from the arbitrator’s order, dated April 10, 2006, is allowed with respect to special award. Paragraph 3 of the arbitrator’s order (special award) is revoked.
The parties will have 30 days to appeal the arbitrator’s decision, dated January 10, 2007.
If the parties are unable to agree on appeal expenses, an expenses hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

March 15, 2007

Nancy Makepeace Director’s Delegate

Date

Mrs. Eulynis Peters died from injuries sustained when she was hit by a car on December 22, 2003. Aviva appeals from the arbitrator’s order, dated April 10, 2006, that it pay her daughters, the respondents Denise Peters and Diane Peters, a supplementary (no spouse) death benefit of $12,500 each pursuant to paragraph 3 of subsection 25(2) of the SABS–1996.¹ At the time of the accident, Mrs. Peters was separated from her husband, Mr. Hilroy Peters, but they had not divorced. He claimed a spousal death benefit under paragraph 1 of subsection 25(2), but the arbitrator found that no payment was required because of the terms of the couple’s separation agreement. Aviva submits this was an error of law.

I am not persuaded the arbitrator erred with respect to the death benefits award. His order will be confirmed with respect to paragraph 1 (death benefit), paragraph 2 (interest), and paragraphs 4 and 5 (arbitration expenses).

Aviva also appeals from the arbitrator’s order that it pay the respondents a special award under subsection 282(10) of the Insurance Act. The arbitrator concluded the respondents were entitled to a special award at the maximum rate allowed – 50 per cent of benefits and interest to which they are entitled, the dollar amount to be agreed or assessed. In his Decision on Expenses, dated January 10, 2007, the arbitrator fixed the amount of the special award at $39,173.50 and ordered the insurer to pay post-judgment interest on the award pursuant to subsection 46(2) of the SABS-1996. He also ordered the insurer to pay SABS interest on the death benefits owing in the amount of $14,173.50 to April 10, 2006 (the date of his first decision) and ongoing to the date of payment, and arbitration expenses (legal fees and disbursements) of $9,628.43.

I find the arbitrator erred in law by ordering a special award. Paragraph 3 of his order of April 10, 2006 will be revoked.

There has been no appeal of the arbitrator’s second decision, likely because the parties are waiting for my decision in the main appeal. The parties will have 30 days to appeal the arbitrator’s second decision.

A. The Dispute

The parties introduced a Joint Statement of Agreed Facts and Documents at the arbitration hearing. The pertinent agreed facts are these. Mr. and Mrs. Peters were married in 1975, and their daughters, Diane and Denise, were born in 1978 and 1983 respectively. Mr. and Mrs. Peters separated in August 1999, and executed a separation agreement on June 15, 2000. Mrs. Peters was given custody of the children, with Mr. Peters to have reasonable access and Mr. Peters to pay child support. The agreement included a release of spousal support, a release against property, and a release against the estate of the other. Mr. Peters entered into a new common-law relationship in October 2001, a little more than two years before the accident. At the time of the accident in December 2003, Diane and Denise still lived with Mrs. Peters while completing post-secondary programs, and it is agreed they were dependent on her. Mrs. Peters, a nurse employed by a hospital, had been on disability leave since the early nineties.

It is agreed Mrs. Peters did not have her own automobile insurance policy. On January 14, 2004, the respondents filed an application for accident benefits from Primmum, which insured the car that struck their mother. They claimed funeral and visitors’ expenses, a dependant’s death benefit of $10,000 each pursuant to paragraph 2 of subsection 25(2) of the SABS-1996, and a supplementary death benefit of $12,500 each pursuant to paragraph 3, which requires that the $25,000 spousal benefit be shared by the dependants of the deceased if no spousal death payment is required under paragraph 1. In support of the supplementary death benefit claim, their lawyer sent the insurer a copy of AXA Insurance Company of Canada v. Prince et al., 1998 CanLII 7123, 40 O.R. (3d) 66, in which the Ontario Court of Appeal held that the deceased’s common-law spouse was entitled to the entirety of the spousal death benefit under the SABS-1994 because he and his wife, from whom he was separated but not divorced, had executed a separation agreement that included a release from all claims arising out of the marriage.

The respondents’ claim for funeral and visitors’ expenses was paid without dispute. On February 18, 2004, Primmum paid each of the respondents a dependant’s death benefit of $10,000. But Primmum refused the claim for a supplementary death benefit on the basis that Mr. Peters remained Mrs. Peters’ spouse at the time of the accident. At about the same time, Primmum communicated its position to Mr. Peters and initiated the insurer priority dispute process under Ontario Regulation 283/95. Primmum’s Notice to Applicant of Dispute Between Insurers, dated March 18, 2004, gave as its reason for the dispute with Aviva, “Eulynis Peters is legal spouse of your insured Hilroy Peters.” Aviva accepted responsibility for the claim in June 2004. The parties agree that Mr. Peters did not initially intend to claim the spousal benefit but eventually did so on August 24, 2004, and that Aviva paid him the $25,000 benefit on September 9, 2004.

B. The Law

Subsection 2(1) of the SABS-1996 states:

“spouse” has the same meaning as in Part VI of the Insurance Act; (“conjoint”)

Part VI of the Act, “Automobile Insurance,” defines “spouse” in subsection 224(1) as follows:

“spouse” means either of two persons 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 Act, or

(i) continuously for a period of not less than three years, or

(ii) in a relationship of some permanence, if they are the natural or adoptive parents of a child; (“conjoint”)

Death benefits are provided under subsection 25(2) of the SABS-1996. The deceased’s spouse receives $25,000 under paragraph 1.² If, at the time of the accident, the insured person “had more than one spouse who is entitled to a payment under this section,” subsection 25(4) requires the payment to be divided equally among them. Each of the insured person’s dependants and each person to whom the insured person had a support obligation at the time of the accident under a domestic contract or court order receives $10,000 under paragraph 2.

Former spouses are also recognized, though the term is undefined. A former spouse to whom the deceased had support obligations under a domestic contract or court order is entitled to a payment of $10,000 under paragraph 4, but is not eligible for the supplementary benefit under paragraph 3, the provision at issue in this appeal. Instead, where there is no spouse to whom payment is required under paragraph 1, the $25,000 benefit is shared equally by dependants and persons (other than former spouses) to whom the insured person had a support obligation at the time of the accident under a domestic contract or court order.

C. The Arbitration Decision

The arbitrator recognized that the definition of “spouse” gave the insurer some basis for its position, because Mr. and Mrs. Peters had married and never divorced. However, he concluded that Mr. Peters could not claim spousal death benefits.

His main focus was the AXA decision, cited above. That case concerned a fatal accident in 1994. There were two claimants for spousal benefits — the insured person’s wife, from whom he had been separated for about five years, and the woman who was his common-law spouse at the time of the accident. The motions judge ordered the spousal death benefit to be shared between the claimants. The common-law spouse appealed, claiming she was the only “spouse” and therefore entitled to the entire amount of the benefit. The Court of Appeal ruled (2 to 1) that the claim of the separated wife was barred by the separation agreement she had reached with the deceased in 1992.

AXA turned on the death benefit provisions of the SABS-1994 – s. 51(1), which provides a benefit where “the insured person is survived by a spouse who was his or her spouse at the time of the accident,” and s. 51(7), which applies when there is more than one “spouse”:

If at the time of the accident the insured person had more than one person entitled to claim as his or her spouse, the payment under subsection (1) shall be divided equally between or among such persons who survive the insured person and who at the time of the death were still spouses of the insured person. [emphasis added]

Justice Osborne, writing also for Austin J.A., held that the phrase “entitled to claim” imposed an additional requirement; where there is more than one “spouse,” each claimant must show that he or she is “entitled to claim” as a spouse.

The arbitrator held that AXA applied to the respondents’ claim:

Clearly, in the light of AXA, the provisions of section 25 of the [SABS] must be understood as meaning that, at most, while the existence of the formalities of marriage raises a prima facie case or a rebuttable presumption for claiming the spousal death benefit, that is not necessarily the end of the fact-finding process. It is, according to AXA, permissible to find the paper entitlement displaced by other actions of the nominal spouse which point to a manifest rejection of ongoing spousal status. While the Peters may have had limited spousal status for the purposes of obtaining a final divorce, or for the purposes of the solemnization of a new marriage, for the purposes of dependant relief legislation there was no longer any such status.³

In reaching this conclusion, the arbitrator considered Mr. Peters’ new common-law relationship and his “complete severance” of economic ties with Mrs. Peters. The arbitrator also considered the policy context. He noted that the separation agreement barred Mr. Peters from making any economic claim against Mrs. Peters during her lifetime. Indeed, it also released any claim against her estate. In contrast, it was agreed that Diane and Denise Peters were dependent on their mother, and it was their uncontradicted evidence that her death left them in economic difficulties. The arbitrator held that “by waiving all future rights against his nominal spouse in the separation agreements, Mr. Hilroy Peters waived the right to put forward a claim for death benefits, as well.”⁴ Further:

It would be a strange and aberrant justice if Mrs. Peters in death was more beholden than in life to her former spouse, to the detriment of her acknowledged dependants, her daughters.⁵

The arbitrator concluded that Mr. Peters was not entitled to the $25,000 spousal death benefit under paragraph 1, and ordered the insurer to pay each of the respondents a half share of the benefit ($12,500) under paragraph 3, plus interest under subsection 46(2) of the SABS-1996 in an amount to be agreed or assessed.

The arbitrator was very critical of the insurer’s conduct of the claim. As stated earlier, he ordered a special award at the maximum rate of 50 per cent of benefits and interest owing, and later fixed the amount of the award at $39,173.50.

III. ANALYSIS

A. “Spouse”

Though the arbitrator described Mr. Peters as the “nominal” spouse of Mrs. Peters, with “limited” spousal status,⁶ there is no authority for this proposition in AXA. There was no dispute in that case that the separated wife remained the “spouse” of the deceased at the time of the accident. This was explicitly acknowledged in Justice Osborne’s reasons, which begin with the following statement:

When Perry Sherbanuk was killed in an automobile accident, he had two spouses for no-fault death benefit purposes, one, his wife from whom he had been separated for about five years, and the other, the woman with whom he had been living for more than one year.⁷

Again, at the outset of Justice Osborne’s analysis:

It is accepted that both the appellant and the respondent come within the definition of spouse . . .” [para. 5]

The only issue in AXA was whether the separation agreement prevented Mrs. Sherbanuk from claiming a share of the spousal death benefit.

The definition of married “spouse” in the SABS-1996 (“either of two persons who . . . are married to each other”) does not address the status of separated married spouses. Nor does it say when a marriage ends.

The arbitrator refers to the Civil Marriage Act, S.C. 2005, c. 33, which states, at s. 2:

Marriage, for civil purposes, is the lawful union of two persons to the exclusion of all others.

He then states:

It is common ground in this matter that Mr. Hilroy Peters was living in a long-term relationship with another at the time of the death of Mrs. Peters, his nominal spouse.⁸

The purpose of the Civil Marriages Act was to bring federal legislation into line with the Charter by recognizing same-sex marriages. It does not provide authority for the proposition that marriage ends when one or both spouses enters into a new common-law relationship. Marriage ends with death or with divorce, as provided in s. 14 of the Divorce Act, R.S.C., 1985, c. 3:

On taking effect, a divorce granted under this Act dissolves the marriage of the spouses.

Indeed, that marriage is dissolved by death or divorce is accepted in any number of accident benefits decisions, though the principle is so well-established it is usually assumed rather than found. I am aware of no authority to the contrary.

I conclude that Mr. Peters remained the spouse of Mrs. Peters at the time of the accident. The issue is whether their separation or their separation agreement precludes Mr. Peters from claiming spousal death benefits and requires the money to be paid to the respondents instead.

B. Death Benefits

If not for AXA, I would be inclined to agree with the insurer, for the following reasons.

Pursuant to subsection 2(1) of the SABS-1996, “spouse” has the same meaning in the regulation as in Part VI of the Insurance Act (automobile insurance). Though fatal accidents are often the context for spousal status disputes, the legislature did not see fit to provide a special definition of “spouse” or restrict the application of the general definition in section 25.⁹ It is difficult to imagine that the drafters did not consider its application to separated married spouses in death benefits cases on the several recent occasions when the definition has been amended to take account of changing family structures.

In fact, the death benefits rules do address the situation of separated spouses. All three versions of the SABS expressly require the spousal death benefit to be shared where there is more than one person entitled to claim as a spouse. This provision (subsection 25(4) of the SABS-1996) typically applies where the deceased was cohabiting with a common-law spouse at the time of the accident, and was separated but not divorced from a married spouse. If the previous relationship was common-law, that spouse is unlikely to share the spousal benefit because a common-law relationship generally ends with separation; the “former spouse” may, however, have a claim under paragraph 4 if the deceased owed a support obligation. To me, this suggests that the legislature intended separated married spouses to share the spousal benefit with the person who was a spouse at the time of the accident. The application of subsection 25(4) post-AXA is not clear to me.

Further, the SABS-1994 and the SABS-1996 expressly provide a death benefit of $10,000 for a former spouse to whom the deceased owed support under a domestic contract or court order. “Former spouse” is not defined, but undoubtedly includes a divorced spouse. The legislature’s express provision for former spouses based on support obligations suggests that the omission of any such restriction in the provisions for spouses was deliberate.

This view also finds support in the many decisions about the treatment of separated spouses. Whether the context is a death benefits claim¹⁰ or a dispute about which insurer is responsible for the claim,¹¹ judges and arbitrators have consistently drawn a distinction with respect to the effect of separation on common-law spouses: Whereas marriage ends on death or divorce, it is cohabitation as partners that determines non-married spousal status.”¹²

Though most of the cases concern a separated common-law spouse, the treatment of a separated married spouse has occasionally been disputed. Again, the result has consistently been that neither separation nor a separation agreement affects the SABS treatment of married spouses.¹³ However, I am not aware of any authority on this point subsequent to AXA. That decision provides much the strongest support for the arbitrator’s conclusion.

The insurer submits that AXA is distinguishable because it dealt with different statutory language (“entitled to claim” rather than “if no payment is required”), different facts (competing spouses rather than competing claims by a spouse and dependents), and a stronger separation agreement (which included a release of “all claims arising out of the marriage.”)

I am not persuaded a meaningful distinction can be drawn.

First, with respect to statutory language, I agree with the arbitrator that changes to the SABS since AXA do not affect the application of that decision.¹⁴

AXA turned on the phrase “entitled to claim” in subsection 51(7) of the SABS-1994, the multiple spouses provision. A similar phrase (“entitled to a payment”) is used in the multiple spouses provision of the SABS-1996, subsection 25(4). In contrast, the pivotal words in this case are the words that open paragraph 3 of subsection 25(2):

If no payment is required by paragraph 1, . . .

Rather than reading these words as imposing an additional requirement for entitlement to a spousal death benefit under paragraph 1, I am inclined to think they merely set out the pre-condition for the application of paragraph 3. In my view, if the legislature had intended to limit the spouses who could claim spousal death benefits, they would likely have done so by adding a “cohabitation at the time of the accident” or similar requirement to paragraph 1, rather than adding ambiguous non-specific language to paragraph 3.¹⁵ However, I am not persuaded that the difference between “entitled to claim” and “if no payment is required” allows me to distinguish AXA. My analysis is similar to that of Justice Morden, but his was the dissenting view.¹⁶

Second, the insurer submits that AXA can be distinguished because it concerned a competing spouses dispute, not a dispute between a spouse who claims a spousal death benefit and dependants claiming a supplementary (no spouse) benefit. Again, I am not persuaded that this factual distinction allows me to depart from the very broad terms of Justice Osborne’s analysis:

11As I read s. 51(7), it assumes that the claimant fits the definition of spouse and requires a further consideration of the spouse's entitlement to the death benefit. Thus, in these circumstances, the existence of the separation agreement is relevant to the issue of the respondent's claim that she is "entitled" to share the death benefit with the appellant. In my opinion, had the legislature intended that this entitlement qualification require that a claimant spouse do no more than establish that she or he falls within the Regulation's definition of spouse, it would have said so in plain language that related the death benefit entitlement to the definition of spouse.

12If this is not the correct interpretation of s. 51(7), no separation agreement would be capable of affecting the death benefit claim of a separated spouse. As the respondent acknowledges, only a final divorce could extinguish that claim. Thus, a "spouse" who has been separated from a deceased insured person for decades would be entitled to share the death benefit equally with a "spouse" with whom the deceased has been living for decades in circumstances where the separated, but not divorced, spouse has, in a separation agreement, released all claims arising from the marriage. This makes no sense to me. It seems to me that where a husband and wife have decided to consensually resolve their differences to achieve, among other benefits, stability in their futures, their agreement should be taken into account to determine if the claimant spouse (here the respondent for purposes of this analysis) is entitled to an equal share of the death benefit. This interpretation of s. 51(7) seems to me to be consistent with the language of the section and in harmony with the general policy objectives of the mandatory no-fault death benefit provisions.

13The purpose of the death benefit is to provide some economic assistance to persons (spouses and dependants) who are assumed, in the statutory no-fault scheme, to be economically disadvantaged as a result of an insured person's death. To view the entitlement provisions on the narrow basis suggested by the respondent would ignore these policy objectives.

14I acknowledge that there will be cases where a "spouse" will receive the death benefit when there is no economic disadvantage and in cases where the only claimant is a "spouse" who has signed a separation agreement. These are exceptions which should not control the interpretation of the section. [paras. 11-14, emphasis added]:

As I read this passage, and particularly the reference in the last paragraph to exceptional “cases where the only claimant is a ‘spouse’,” Justice Osborne’s analysis applies to any dispute between a spouse and another claimant for the $25,000 death benefit, whether the competing claim is that of another spouse or a dependant. If anything, Justice Osborne’s focus on the dependent relief purpose of death benefits suggests his reasoning may support the respondents in this case even more than the common-law spouse in that case. I agree with the arbitrator, who rejected the insurer’s argument “that AXA speaks only to cases of competing, multiple spouses,” and held that it “speaks to all situations where there are competing claims for a spousal death benefit.”¹⁷

The same policy considerations favour the arbitrator’s interpretation of the death benefits provisions at issue in this case. If the arbitrator is wrong, then Mr. Peters, a separated but not divorced spouse to whom Mrs. Peters owed no support under a domestic contract or court order, receives $25,000 under paragraph 1, more than he would receive as a dependent former spouse ($10,000 under paragraph 4)¹⁸ and more than Mrs. Peters’ dependent daughters receive ($10,000 each under paragraph 2). This outcome is inconsistent with the dependent-support purpose of death benefits.

Death benefits also recognize other losses – and the simple value of life – as has been noted where the claimants are the parents of a child who died in an accident,¹⁹ and there is no dependency requirement for a spouse to receive a death benefit under paragraph 1. But it is not clear what legislative policy objective would be served by awarding the spousal benefit to Mr. Peters, who appears to have moved on with his life after the separation.

Third, the insurer submits that AXA is distinguishable because the separation agreement between Mr. and Mrs. Sherbanuk extended to “all claims arising out of the marriage.” The separation agreement between Mr. and Mrs. Peters was not as broadly drafted and did not address third party benefits. However, the agreement, though sparse, includes releases with respect to spousal support, property and estate, and clearly reflects the spouses’ desire to end their relationship, sever their economic ties and move on. I am not persuaded the arbitrator erred in law when he concluded:

Consequently, I find that Mr. Peters had voluntarily withdrawn himself from the class of eligible spouses provided for in section 25 of the Schedule, by reason of his complete separation and the acknowledgement of the end of his spousal obligations and privileges outlined in the separation agreement he executed on June 15, 2000. Consequently, no payment to a spouse was required pursuant to section 25(2)1 The monies then became available for the daughters to claim pursuant to section 25(2)3 of the Schedule.²⁰

I conclude the arbitrator’s reasoning is consistent with Justice Osborne’s analysis and that a meaningful distinction cannot be drawn between this case and that one.

I also considered the implications of the arbitrator’s decision for disputes between insurers. The definition of “spouse” affects the definition of “insured person” in subsection 2(1) of the SABS-1996, which governs coverage, and subsection 268(2) of the Insurance Act, which governs insurer priority. There was no coverage or priority dispute in AXA. The arbitrator did not need to address these questions either, because the insurers, who are adverse in interest, agreed that Mrs. Peters was Aviva’s insured. Nonetheless, this decision may complicate coverage and priority disputes. On the other hand, as the arbitrator stated, the treatment of spouses has become a more difficult process in any event because of changing family structures. For example, had Mrs. Peters entered into a new common law relationship at the time of the accident, a decision would have to be made about whether the survivor was a “spouse,” as defined, and that enquiry would have been even more problematic had there been a recent separation.²¹ I am not persuaded that the arbitrator’s conclusion has absurd or unworkable consequences.

Finally, I am not persuaded the arbitrator erred in rejecting the insurer’s argument that the respondents waived their right to object by failing to participate in the priority dispute process when put on notice. Though the priority dispute had potential implications for their own claim, it was essentially a dispute between the two insurers. In any event, the respondents had made their position clear when they claimed the benefit in January 2004, two months before Primmum gave notice of the priority dispute, and they continued to pursue their claim appropriately through the arbitration process.

Accordingly, I am not persuaded the arbitrator erred in law by finding the respondents entitled to share the $25,000 supplementary (no spouse) death benefit under paragraph 3 of subsection 25(2) of the SABS-1996 (paragraph 1 of the order dated April 10, 2006), plus interest under subsection 46(2) (paragraph 2). As the insurers presented no basis for overturning the arbitrator’s expenses award, paragraphs 4 and 5 will also be confirmed.

C. Special Award

Subsection 282(10) of the Insurance Act mandates a special award “in addition to awarding the benefits and interest to which an insured person is entitled” if the arbitrator finds that the insurer “has unreasonably withheld or delayed payments.” As noted by the arbitrator, an award is mandatory, once the arbitrator finds that benefits were unreasonably withheld. Because a finding of unreasonableness “is highly dependent on the arbitrator’s view of the evidence,” the arbitrator’s assessment deserves considerable deference.²² However, the arbitrator’s discretion must be guided by the general principles set out in the Commission’s special awards decisions. I am not satisfied that a special award was available to the arbitrator in this case.

First, the arbitrator’s harsh assessment of the insurer’s conduct as “wrong-headed and ill-advised” and “a repudiation of its responsibilities . . .”²³ flies in the face of his earlier recognition that “on a very simplistic reading of the section it is easy to see how Primmum could take the position it has.”²⁴ Indeed, that marriage ends in death or divorce – not separation – is notorious, and the insurers should not be faulted for requiring explicit statutory or judicial language to overcome that principle, which is well-established in numerous Commission and court decisions. The application of AXA to paragraph 3 of subsection 25(2) of the SABS-1996 was a novel question of law. Even on its strongest reading, the AXA decision did not require a reasonable insurer to conclude, pending adjudication, that Mr. Peters was not entitled to a spousal death benefit.

Second, the parties agreed that in February 2004, after receiving the respondents’ claim and their lawyer’s letter enclosing the AXA decision, Primmum contacted Mr. Peters to advise that it took the position he was entitled to a spousal benefit. The arbitrator was especially critical of the insurer’s conduct in this regard.

The arbitrator’s finding that the insurers “were prepared to favour one insured over another in settling the claim” and “to pit family member against family member by persuading Mr. Peters to file a claim and assuring him that he was ‘entitled’ to the money,”²⁵ ignores the legitimate coverage issue facing the insurers. As is clear from the agreed facts, Primmum, which insured the car that struck Mrs. Peters, had no responsibility to pay any benefit if Mrs. Peters was the spouse of Mr. Peters at the time of the accident.

Once Primmum concluded, correctly, that the two remained spouses, it had reason to conclude, pending adjudication of the AXA issue, that Mr. Peters was entitled to the spousal death benefit under paragraph 1 and therefore the respondents were not entitled to the supplementary benefit under paragraph 3. Primmum then initiated the priority dispute process, as required by Ontario Regulation 283/95 (Disputes Between Insurers), properly giving notice to Mr. Peters and, through counsel, to the respondents. In this context, I am unsure what to make of the arbitrator’s statement that Primmum “officiously intermeddled, prompting Mr. Peters to claim something he originally had no intention to claim . . . .”²⁶ Indeed, Primmum would have been open to criticism if it had not advised Mr. Peters, who was Aviva’s named insured, that it had determined he was entitled to claim.

The arbitrator also criticized the insurer for not paying the money into court, as allowed by section 271 of the Insurance Act.²⁷ He stated that doing so “would have had an important effect on the outcome of this dispute, especially the special award.”²⁸ The arbitrator did not consider the interaction of the payment into court provisions and the disputes between insurers regulation (which was not an issue in AXA) and I heard no submissions on the issue. In any event, even if paying the money into court “might well have been an appropriate strategy,” the arbitrator does not go so far as to suggest this was legally required.

Moreover, this was not a case where the insurer paid nothing. There was no advantage for Aviva in paying the $25,000 to Mr. Peters, in accordance with its assessment that he was entitled to it. The arbitrator seems never to have considered the possibility that this represented the insurer’s good faith attempt to comply with its obligations to its insureds, and the evidentiary basis for his suggestions of improper motive are unclear from the decision.²⁹ If anything, the payment to

Mr. Peters would be a mitigating factor, in accordance with Persofsky and Liberty Mutual Insurance Company.³⁰ Instead, the arbitrator seems to have considered it an aggravating factor.

In any event, there is abundant case-law for the principle that an insurer is not held to a standard of perfection in responding to a claim, that an insurer’s claims decision is to be judged on the basis of the information available at the time, and not from hindsight, and that an insurer is not to be found unreasonable just because an arbitrator concludes its claims decision was wrong. In this case, the insurers had a reasonable basis for their decision, and a special award was not available. I am persuaded the arbitrator exceeded his authority in ordering a special award.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, a hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.