Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 179
FSCO A07-001147
BETWEEN:
GEOFFREY PRIOR
Applicant
and
DOMINION OF CANADA
GENERAL INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Eban Bayefsky
Heard: August 18, 19 and 20, 2008, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances: Roger Gosbee for Mr. Prior
Joan Takahashi for Dominion of Canada General Insurance Company
Issues:
The Applicant, Geoffrey Prior, was seriously, and potentially catastrophically, injured in a motorcycle accident on July 24, 2004. He applied for and received certain statutory accident benefits from Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.1 Dominion denied Mr. Prior’s claims for income replacement benefits, non-earner benefits, housekeeping benefits and certain attendant care benefits, in part, on the basis that he was not insured at the time of the accident. The parties were unable to resolve their disputes through mediation, and Mr. Prior applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The Commission conducted a pre-hearing conference on October 11, 2007, at which time dates were scheduled to hear a preliminary issue in this case, namely, whether Dominion was entitled to deny Mr. Prior benefits because he knew or ought reasonably to have known that he was operating a motorcycle while it was not insured under a motor vehicle liability policy. The preliminary issue hearing commenced on June 9, 2008, after which I issued a letter which read, in part, as follows:
I understand that Mr. Prior has commenced a tort action against the driver and owner of the other vehicle involved in the accident and that Dominion is acting on their behalf, represented by Mr. [James] Davidson. I also understand that Mr. Prior has commenced a contract action against Primmum Insurance (represented by Mr. [Peter] Kazdan) in which he is seeking a declaration that he was insured by Primmum at the time of the accident.
The parties agreed that, in order to determine the preliminary issue, it is first necessary to determine whether Mr. Prior was, in fact, insured by Primmum at the time of the accident. The parties advised that the issue of whether Primmum insured Mr. Prior at the time of the accident was in issue in the tort action, as well as in the contract action. Given the similarity of the issues in the three proceedings, as well as the potential interest of the court defendants in the outcome of the Commission’s preliminary issue hearing, I raised the question of whether the court defendants ought to be formally notified of these proceedings and given an opportunity to participate. Both Mr. Prior and Dominion concurred that this ought to be done, at least in respect of Primmum. I ultimately ruled that Primmum, the tortfeasors and Dominion ought to be notified of the preliminary issue hearing and given an opportunity to participate. However, I will only decide whether and to what extent, if any, standing ought to be accorded to these other parties once I have received their position, as well as the response of Mr. Prior and Dominion. I, therefore, set out the following schedule to address these matters:
By June 20, 2008, Primmum, Richard Dennis, Chris Dennis and Dominion shall advise whether they wish to participate in the preliminary issue hearing, the capacity in which they wish to do so and the basis upon which they seek standing.
By June 27, 2008, Mr. Prior shall provide his response to these submissions.
By June 30, 2008, Dominion shall provide its response to Mr. Prior’s and the others’ submissions.
By July 4, 2008, I shall issue a decision on the participation of the court defendants in the preliminary issue hearing.
The preliminary issue hearing shall resume on August 18, 19, 20 and 21, 2008 (the dates originally scheduled for the hearing on the merits).
The hearing on merits shall now be heard on December 1, 2, 3 and 4, 2008.
At the preliminary hearing, I asked Mr. Gosbee and Ms. Takahashi to provide me with the contact information for the court defendants. They provided two different addresses for each of Richard and Chris Dennis. We have been unable to obtain a full and accurate address for these two individuals. In these circumstances, I would ask Mr. Davidson to discuss the matter with Richard and Chris Dennis (as well as with Dominion) as quickly as possible so as to be able to provide their position by June 20, 2008, as set out above.
On June 23, 2008, I issued the following letter:
I acknowledge receipt of correspondence dated June 20, 2008 from Mr. Kazdan and Mr. Davidson.
In my letter of June 10, 2008, I ordered Primmum and Dominion, as well as Richard and Chris Dennis, to “advise whether they wish to participate in the preliminary issue hearing, the capacity in which they wish to do so and the basis upon which they seek standing.” In response, Mr. Kazdan [provided a lengthy list of questions and] advised that his client (Primmum) had a “number of issues to consider before being able to consider whether they wish to move for standing…” and that “without knowing more about how the Arbitration will proceed, and the status of Primmum’s involvement” he was “having difficulty providing [a] recommendation to [his] client.” Mr. Davidson simply stated that he shared Mr. Kazdan’s concerns. Mr. Davidson did not indicate whether he spoke on behalf of Richard and Chris Dennis, or whether he had discussed the matter with them, as requested in my June [10]th letter. On June 17, 2008, Ms. Takahashi provided a current address for Richard and Chris Dennis. We sent the June [10]th letter by overnight courier to them. Both Mr. Kazdan and Mr. Davidson concluded their letters by stating that they looked forward to hearing from me.
Most, if not all, of the many issues identified by Mr. Kazdan cannot be addressed in the abstract and without the submissions of all of the parties affected. I decline to engage in a general conversation with Mr. Kazdan and Mr. Davidson about the potential answers to the issues raised. I sought the position of Primmum and Dominion, as well as Richard and Chris Dennis, on their potential standing in this arbitration. They have not provided their position, one way or the other. They have also not clearly stated whether they require additional time to consider their response. I await the submissions of the current parties to the arbitration, Mr. Prior and Dominion.
On July 2, 2008, I issued one further letter on the issue of standing of the third parties:
I acknowledge receipt of Mr. Gosbee’s correspondence of June 24, 2008 and of Ms. Takahashi’s correspondence of June 24 and 27, 2008. I received no further correspondence from Primmum or Dominion following my June 23, 2008 correspondence. I did not receive a response from Richard or Chris Dennis to my June 10 or 23, 2008 correspondence.
As indicated in my June 10, 2008 correspondence, given the similarity of the issues in the three relevant proceedings, as well as the potential interest of the court defendants in the outcome of the current proceeding, the court defendants were offered an opportunity to participate in the preliminary issue hearing. As noted in my June 23, 2008 correspondence, despite my having sought the position of the court defendants on their potential standing in this arbitration, they did not provide their position, one way or the other.
On the first day of the preliminary issue hearing, both Mr. Prior and Dominion initially maintained that the matter could proceed without the participation of the court defendants. Mr. Prior then took the position that Primmum should be given an opportunity to participate in the proceeding. Dominion maintained that all of the court defendants should be given an opportunity to participate and that, at the very least, Primmum should be involved.
In its June 24, 2008 correspondence, Dominion reiterated its position that at least Primmum should be involved in the hearing. In response, Mr. Prior submitted that none of the court defendants needed to be added as parties to the proceeding. In its June 27, 2008 correspondence, Dominion submitted that at least Primmum should be “invited to participate in the mediation so that discussions can take place as to whether and to what extent they will actively participate” in the hearing. Dominion also suggested that Primmum should be granted intervenor status in the preliminary issue hearing.
I decline to add Primmum, Dominion, Richard Dennis or Chris Dennis, as parties, in any capacity, to the preliminary issue hearing. Notice of this matter was provided on the basis of the similarity of the issues in the three relevant proceedings and the potential interest of the court defendants in the outcome of the current hearing, not on the basis that their participation was necessary to a proper determination of the issues in dispute. My understanding is that Dominion had arranged for various individuals from Primmum to give evidence at the preliminary issue hearing. I see no reason that Dominion cannot continue on this course so as to bring forward the information they feel is relevant to a determination of the matter. Dominion cited the cases of Vo and Maplex General Insurance Company (OIC P-002777, March 11, 1994) and Vieira and Royal & SunAlliance Insurance Company of Canada and Chubb Insurance Company of Canada (FSCO P04-00016, February 15, 2005) in support of its view that at least Primmum should be involved in this proceeding. However, in both cases, intervenor status was granted following a specific request to be added by the interested parties. In the present case, despite being notified, none of the court defendants have asked to participate. Finally, to the extent that I understand the request, I see no basis to invite Primmum or any of the other court defendants to “participate in a mediation” to discuss whether they will participate in the preliminary issue hearing. They were notified of these proceedings, and did not seek to participate.
As noted in my June 10, 2008 correspondence, the preliminary issue hearing will resume on August 18, 19, 20 and 21, 2008.
Mr. Davidson subsequently advised (on July 11, 2008) that he had responded to my previous inquiries on behalf of Richard and Chris Dennis in his “capacity as their lawyer.”
The preliminary issue hearing resumed on August 18, 2008.
The preliminary issue is:
- Is Dominion entitled to deny Mr. Prior benefits pursuant to section 30(1)(a) of the Schedule on the grounds that Mr. Prior knew or ought reasonably to have known that he was operating a motorcycle while it was not insured under a motor vehicle liability policy?
Result:
- Dominion is not entitled to deny Mr. Prior benefits pursuant to section 30(1)(a) of the Schedule.
EVIDENCE AND ANALYSIS:
Background
Mr. Prior was seriously injured in a motorcycle accident on July 24, 2004 when an oncoming truck veered in front of him, causing him to lose control and throwing him from the motorcycle into a telephone pole. At the time of the accident, Mr. Prior was riding with a female passenger who was killed in the collision. Mr. Prior lost consciousness in the accident and sustained various fractures. He was air-lifted to Sunnybrook & Women’s College Health Sciences Centre where he remained unconscious for approximately three weeks, and was treated for approximately five weeks, undergoing numerous surgeries. He was subsequently transferred to the St. John’s Rehabilitation Hospital, where he was treated until the end of November 2004. He continued to receive treatment as an out-patient at the Back on Track Complex Trauma Program at St. John’s Rehabilitation Hospital.
In the months following the accident, a dispute arose between Mr. Prior and Primmum Insurance Company (“Primmum”), the company who had insured the motorcycle, as to whether Mr. Prior was insured at the time of the accident.2 Dominion of Canada3 now maintains that, on the day of the accident, Mr. Prior knew or ought reasonably to have known that the motorcycle he was riding was no longer insured under a motor vehicle liability policy. Specifically, Dominion maintains that Mr. Prior knew or ought reasonably to have known that the motorcycle insurance policy he held with Primmum had been cancelled and had not been renewed or reinstated by the time of the accident. Mr. Prior maintains that the Primmum policy had not been properly cancelled and that, in any event, he reasonably believed that the policy was in force at the time of the accident.
Pursuant to section 30(1)(a) of the Schedule, an insurer is not required to pay an income replacement benefit, a non-earner benefit or a benefit under section 20, 21 or 22 (the latter referring to housekeeping benefits) in respect of a person who was the driver of an automobile at the time of the accident 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.” The parties agree that Dominion bears the onus of establishing, on a balance of probabilities, that Mr. Prior knew or ought reasonably to have known that the motorcycle he was operating was not covered by an insurance policy.4 In determining whether Dominion has met this onus, I must consider, in part, whether an ordinary, rational person in Mr. Prior’s situation would have known that he or she was operating the motorcycle while it was not insured.5
Mr. Prior’s interaction with Primmum prior to the accident
On June 16, 2004, approximately five and a half weeks before the accident, Primmum sent Mr. Prior a registered letter concerning the termination of his motorcycle insurance policy for “non-payment of premium.” The letter states as follows:
We hereby give you notice that the above-mentioned policy is being terminated for non-payment of premium. The conditions of your contract provide that termination will be effective fifteen (15) days from the receipt of this letter at the post office to which it is addressed.
Following cancellation, your account indicates an outstanding balance of $68.40 (including retail sales tax, if applicable) representing the period the coverage was in force. We ask that you pay this immediately by certified cheque or a money order.
Any partial payment, whether cashed or not, does not confirm that the policy has been reinstated.
We trust you will give this matter your prompt attention.6
Mr. Prior testified that he believed his wife signed for the letter on June 23, 2004 and that he did not open the letter until the end of June or early July 2004.
Regarding the extent of Mr. Prior’s memory of events preceding the accident, he testified that his memory of the events a couple of weeks before the accident was no longer vague, but that he still did not have a clear memory of events a couple of months before the accident. He testified that, by 2005, his memory of events two weeks before the accident was “pretty good.” He stated that the May 17, 2005 report of Dr. Y. Korman (a psychologist who assessed him at St. John’s Rehabilitation Hospital) to the effect that he had “only vague recollections of the events 2 months prior to the accident” was a “mistake.”
Dominion entered a Canada Post “Track a Package” form into evidence, which indicates that Mr. Prior signed for the June 16, 2004 letter on June 23, 2004. Further, on October 22, 2004, Ms. Erica McBride (currently a quality assurance manager with Primmum and, in 2004, a team leader) recorded in computerized log notes of action on Mr. Prior’s file (which included notes of contact with Mr. Prior and internal company communications) that the “signature information” indicated that Mr. Prior had signed for the letter on June 23, 2004.
On July 5, 2004, Primmum sent Mr. Prior a second letter, as follows:
As per our previous correspondence, the above-mentioned insurance policy was cancelled.
The earned premium for the period your policy was in force amounts to $68.40 and remains outstanding on your account.
Please remit this amount within 14 days or your file will be submitted to our collection agency for further action.
Your prompt payment will finalize this matter and will keep your record clear of a delinquent status.
If you have already sent your payment, please accept our thanks and kindly disregard this letter.
Should you have any questions regarding this matter, please contact us.
Primmum sent a statement entitled “Your Automobile Insurance Policy” effective July 3, 2004, “enclos[ing] a confirmation of cancellation” and stating, in part, that “no policy will be reinstated after two payments with non sufficient funds.”
On July 5, 2004, Primmum also sent Mr. Prior a “Credit Note,” with an effective date of July 3, 2004, an expiry date of February 2, 2005 and a description of “cancellation automobile insurance.” Under a heading of “Method of Payment,” the Credit Note states as follows:
You had chosen to pay your premium through our interest-free preauthorized payment plan from the account…, in the name of Geoffery [sic] Prior.
Following this transaction and taking into consideration the payments that you have made until now, we owe you $119.45. This amount will be deposited directly into your bank account shortly.
Do not hesitate to contact us should you require additional information.
Mr. Prior testified that he was experiencing a number of financial problems at the time of these letters and that two of the cheques he had given to Primmum (one in April and one in June) had been returned “NSF.” He stated that he had corrected the problem in April by calling Primmum and paying an “NSF penalty.” He said that Primmum had told him to pay the premium and his policy would not be cancelled. He also said that this was a special concession by Primmum.
Mr. Prior testified that he “understood 100%” what the June 16, 2004 letter said, namely, that the “policy was cancelled after so many days.” Mr. Prior testified that he “absolutely” did not drive his motorcycle after receiving this letter and until the matter was cleared up, because he was not insured. Mr. Prior acknowledged that this was a very different situation than in April (since the policy was not being cancelled), but that he dealt with it in the same way, namely, by calling Primmum to find out what to do to rectify the situation.
Mr. Prior testified that he had arranged a second mortgage which closed on Friday, July 10, 2004 (although the mortgage seems to have been registered and effective on July 9, 2004), and that, the following Monday, July 13, 2004, he called Primmum about the June 16th registered letter. Mr. Prior stated that he had not called Primmum between June 16 and July 13, 2004.
Mr. Prior testified that, in the July 13th telephone call, he asked the person at Primmum’s call centre what he should do, and that he was told to send in $68.40, which would bring his policy into “good standing.” Mr. Prior also said that he was told that once he sent in the $68.40, his policy would be “reissued.” Mr. Prior testified that he would have driven to Primmum’s office that day to deliver the $68.40 (as he had done to rectify two other insurance policies in respect of which he had received cancellation notices), but was told that Primmum did not have an office since it was an internet company. Mr. Prior said that he, therefore, obtained a money order and sent it to Primmum by priority post. Mr. Prior also said that, if he had had to get new insurance (because his Primmum policy had been cancelled), he would have done so at one of the other insurance companies he visited on July 14, 2004. Paul Aleong, a senior underwriting analyst with Primmum, testified that Primmum received the money order on July 14, 2004. Mr. Prior stated that he did not call Primmum again since he had not been instructed to do so. He stated that he did not begin driving his motorcycle again until the following weekend, to allow time for Primmum to receive the money order. Mr. Prior was directed to Primmum’s computerized log notes for July 13, 2004, which stated as follows:
CLIENT CALLED TO INQUIRE WHAT O/S [outstanding balance] IS---ADVISED WE NEED A CC/MO [certified cheque/money order] FOR $68.40 BEFORE QUOTING----CLIENT WILL SEND FUNDS TODAY
Mr. Prior denied being told in the July 13th phone call that he needed to send Primmum $68.40 before they would “quote him a new policy.”
Mr. Prior testified that he believed that, if he sent the $68.40 Primmum had requested, his policy would be “brought back to good standing.” He stated that he had “no doubt” that he was insured with them at the time of the accident. He stated that he believed that when he sent the $68.40, he “had insurance.”
In cross-examination, Mr. Prior testified that he understood that premiums needed to be paid for an insurance policy to be in force. He testified that he “absolutely” had a good understanding of how the motorcycle insurance system works. He acknowledged that the June 16, 2004 letter indicated that any partial payment did not confirm that the policy would be reinstated. He stated that he understood that there was nothing in the July 5, 2004 letter concerning reinstatement of the policy, but added that this was mentioned in the July 13, 2004 phone call with Primmum. Mr. Prior maintained that by submitting the $68.40, he had made a full payment, not a partial payment, taking into account the amount that Primmum said they owed him (namely, $119.45). Mr. Prior testified that he understood that he needed to send $68.40 before a policy would be issued, not quoted, and pointed out that Primmum’s notes on July 5, 2004 indicate that the $68.40 payment was required “prior to new policy being issued.” Mr. Prior also said that the person he spoke to on July 5, 2004 said “send the money and I’d be insured.” He said that he then did what they had asked him to do. He stated that he would not have gone to all of the trouble of sending the $68.40 by priority post if a new policy was not going to be issued, and that, instead, he would have purchased new insurance for his motorcycle at the companies he visited to rectify the insurance problems there.
Chris Southin, a former call centre agent with Primmum, testified that once he read the notes he had made of the July 13, 2004 telephone call with Mr. Prior, he recalled the conversation. He testified that Mr. Prior had called to find out what the outstanding balance was left on his policy and that he had told Mr. Prior that $68.40 was outstanding and had to be received before a new policy would be quoted. Mr. Southin said that he believed that Mr. Prior asked if he could come into the office to pay the balance, that they did not encourage this, but that if Mr. Prior had asked to come in, he would have said he could. Mr. Southin testified that Mr. Prior had asked how he could get a price on a new policy and that clients would ask this when their policy had been cancelled. Mr. Southin stated that once a client’s policy was cancelled, they would be treated as a new client, being quoted a price for a new policy and being asked the usual basic questions about the type of vehicle being insured. Mr. Southin testified that he believed he clearly communicated this process to Mr. Prior, and that he was “100% certain” that he would not have told Mr. Prior that his policy would be reinstated upon payment of the outstanding balance of $68.40. Mr. Southin testified that all of the call centre agents were versed in Primmum’s policy on issuing insurance policies and that once a policy was cancelled, the process would have to be started over again, with the client being treated like a brand new client.
In cross-examination, Mr. Southin stated that, despite the fact that he took approximately 18,000 calls per year, based on the notes, he recalls the July 13, 2004 telephone conversation with Mr. Prior. However, he said that if he had been shown his note without his name on it, he would not have known it was his note. Mr. Southin conceded that the July 13, 2004 record was not completely accurate. He said that, other than the July 13, 2004 note and the normal procedure followed by Primmum, he had no way of recalling what he had said in that call. Mr. Southin acknowledged that the July 13, 2004 note does not mention that Mr. Prior asked if he could come into the call centre office to make his payment. Mr. Southin was directed to Primmum’s log note for July 5, 2004, which states as follows:
Cancellation non payment; accepted; Effect: 2004-07-03; Non payment E/P [earned premium] of $68.40 REQ PRIOR TO NEW POL BEING ISSUED
In relation to this note, Mr. Southin testified that, on July 13, 2004, he said that the $68.40 had to be paid before a new policy would be “quoted,” not “issued.” Regarding the July 5, 2004 Credit Note, Mr. Southin said that he did not know why Primmum would send Mr. Prior a letter stating that they owed him $119.45, or what that money was for.
Mr. Aleong testified that the $119.45 credit note was something that the system automatically generated after Mr. Prior’s policy was cancelled and that it advised of the balance on the policy. Mr. Aleong testified that the July 5, 2004 log note was the manner in which the analysts were advised of the outstanding balance due before Mr. Prior could be quoted a new policy.
In cross-examination, Mr. Aleong testified that the notes recorded on the computer could not be changed once the day ended, but stated that he did not know why the October 22, 2004 note contained a reference to an action taken on November 3, 2004. Mr. Aleong acknowledged the log note of June 15, 2004 stating “R/L [registered letter] sent June 16, C/C [certified cheque] funds of $676.40 by July 3 or pol canx [policy cancellation]” and testified that Primmum had not sent a registered letter concerning the $676.40 or, at least, that this amount was not mentioned in the June 16, 2004 registered letter. Mr. Aleong acknowledged that the June 16, 2004 registered letter does not indicate how much Mr. Prior owed Primmum (namely, the premium of $676.40) and that the only figure mentioned was the $68.40. Mr. Aleong acknowledged that the two documents Primmum sent to Mr. Prior on July 5, 2004 (the letter and the Credit Note) contain two different figures (namely, $68.40 and $119.45). Mr. Aleong testified that he did not believe that Primmum ever sent Mr. Prior a letter requesting a payment of the $676.40 premium. Mr. Aleong stated that the July 5, 2004 letter did not contain an offer of reinstatement. However, he stated that, if the balance was received prior to cancellation (that is, after the June 16, 2004 notice of cancellation and before the cancellation date), the policy would be reinstated. He stated that if the $676.40 balance had been paid in full, it would have “avoided cancellation.” Mr. Aleong testified that he only uses the terminology used in the office when he said that the policy would be “reinstated” if the balance was paid before the policy was “cancelled.”
Helen Maheras, an accident benefits analyst team leader, testified that, as a result of a call from Mr. Prior on December 6, 2004, she reviewed the file and (as noted in the log notes) was advised that Mr. Prior was “originally…supposed to have paid $676.40 by July 3, 2004, so that his policy could be renewed” and that “the $68.40 was an [outstanding] balance that remained upon termination of his policy…”.
Erica McBride, currently a quality assurance manager with Primmum and, in 2004, a team leader, testified that Primmum’s policy regarding NSF cheques was to allow a special instalment the first time a client’s cheque was returned NSF, and then, the second time, to “initiate cancellation.” Ms. McBride testified that, according to the April 20, 2004 log note, Ms. K. Stewart, a client service representative, called Mr. Prior’s home and “left a message with Bob” advising of the special instalment, which was a one-time accommodation. Ms. McBride noted that, on June 7, 2004, a J. Cahigas at Primmum asked that Mr. Prior be advised to pay the “balance in full” by certified funds “to avoid cancellation.” Ms. McBride noted that Primmum then sent the June 16, 2004 registered letter to Mr. Prior. Ms. McBride testified that, once Mr. Prior’s policy had been cancelled, a new policy would have had to be issued based on new information obtained from the client. Ms. McBride stated that the $68.40 was received from Mr. Prior on July 14, 2004 and that, between that date and the date of the accident, Mr. Prior did not contact or send further funds to Primmum. Ms. McBride testified that Primmum would only reinstate a policy if it had been cancelled in error, and that this would have to be done by a Team Leader or Senior Manager. Ms. McBride stated that the $119.45 amount on the July 5, 2004 Credit Note was not accurate because it did not take into account the June payment being returned to Primmum. Ms. McBride stated that Mr. Prior never contacted Primmum to inquire about the Credit Note or the payment that was to be made to him.
In cross-examination, Ms. McBride acknowledged that, contrary to the notes she made of the telephone conversation she had with Mr. Prior on October 22, 2004, the registered letter sent on June 16, 2004 only mentioned the $68.40 amount, not that the policy would be cancelled if $676.40 was not paid by July 3, 2004. Ms. McBride testified that it was possible that Primmum did not send a letter mentioning the $676.40 amount. Ms. McBride stated that, despite notes to the effect that Mr. Prior was to be advised of the one-time concession concerning the April NSF payment, the only record is that a Primmum agent (Ms. Katie Stewart) called Mr. Prior’s home and left a message with someone named “Bob” advising him of the details of the special instalment. Ms. McBride testified that, despite notes on June 7 and 15, 2004 to the effect that Mr. Prior was to be, and had in fact been, advised that he needed to pay the balance of $676.40 in full in order to avoid the cancellation of his policy, there appeared to be nothing in the file indicating that this had been done. Ms. McBride testified that she believed that the only demand made to Mr. Prior for payment before his policy was cancelled was for the $68.40, and that he paid this on July 14, 2004. Ms. McBride was directed to a log note of October 22, 2004 in which she recorded her conversation with Mr. Prior, and acknowledged that, despite the fact that Mr. Prior would have made various comments in that phone call, the log note does not record any of those comments.
Mr. Prior’s interaction with Primmum following the accident
Mr. Aleong noted that, according to a July 27, 2004 log note (three days after the accident), Mr. Prior’s mother, Mrs. Jean Patton, had called Primmum to inquire whether Mr. Prior’s insurance policy was still valid, and was advised that the policy had been cancelled effective July 3, 2004. Mr. Aleong also noted that, according to the August 25, 2004 log note, Mr. Prior had called the call centre “wanting to see if he had insurance the day of his accident” and that he was advised that his policy had been cancelled prior to the accident. The note also indicates that Mr. Prior had stated that he thought he had 21 days from the receipt of the June 16, 2004 registered letter, but was advised that he had 15 days from “receipt of the registered letter being post marked at the post office…”. Mr. Prior testified that he did not recall this conversation, that it was right after he regained consciousness from the accident, and that he “didn’t have a clue what was going on.”
Mr. Prior testified that approximately three to four months following the accident, he found out that he might not have been insured. He said that he called Primmum on October 25, 2004 to find out “what was going on.” He said that, two days later, and based on this conversation, his mother wrote Primmum on his behalf. He said that he “made notes” and that he “remember[ed] doing the letter.” He also said that he had told his mother what the person on the phone had said and that she had written the letter. He said that he also remember his mother doing a letter as well.7 He said that his mother used his notes to do her letter. He also said that she did her letter “all on her own.” The letter Mrs. Patton did on behalf of, and signed by Mr. Prior, was dated October 27, 2004. Mr. Prior testified that he did not remember whether he read this letter before it was sent.
Mrs. Patton testified that she had written the October 27th letter after having talked to her son, that he had told her what to write and that she had given it to him to sign. Mrs. Patton testified that she was surprised her son remembered anything at the time, that his head “was not quite straight” and that she knew that some of the things he had said were wrong. She said that, even after her son’s transfer to St. John’s Rehabilitation Hospital, he was depressed and sedated and that he said things that did not make sense. Mrs. Patton testified that she did not know anything about her son’s dealings with Primmum before she wrote her letter of October 23, 2004, but also that she knew the contents of the October 27, 2004 letter by the time she wrote the October 23, 2004 letter. She said that she wrote both letters at the same time. Mrs. Patton said that she could not recall how much of the October 27, 2004 letter her son read, that she presumes he read it when he signed it, and that he definitely did read it. The letter is as follows:
The circumstances regarding this policy are as follows. The letter received by registered mail stated that the policy would be cancelled a certain number of days after the letter was picked up from the post office. After receiving the letter I had a conversation with an agent at the company call-in center. A money order was mailed by “Priority Post”, fulfilling the instructions given by the company representative at the call-in centre.
The agent at the call centre said that after mailing the necessary amount of money, I should ring the agent to have a new policy issued. The accident on July 24th. [sic] prevented me from making that call.
There should be no problem in paying for all necessary treatment as the guilty party in the accident has insurance. Some of the charges resulting from the accident are:
a) dangerous driving causing death
b) dangerous driving causing bodily harm
c) impaired driving causing death
d) impaired driving causing bodily harm
Some necessary treatment is being withheld because the insurance company has not assigned a claim or an adjuster. If the treatment does not take place now, the injuries will not be healed to the greatest extent possible. I am a young man with a family; it is essential that rehabilitation be as complete as possible. This claim is eligible for income replacement benefits and it is imperative that, in the very near future, my family begin to receive some of the support that is due to us.
Mr. Prior testified that the phrase in the letter that he “should ring the agent to have a new policy issued” was his mother’s wording, that it was “not how the phone call went on July 13th” and that his memory was not very good at that time (since he was on various medications and was having hallucinations). He said that he has a better memory now of both the July 13th phone call and the accident.
Findings
I find that Dominion has not discharged the onus on it of showing that Mr. Prior knew or ought reasonably to have known that, at the time of the accident, he was operating his motorcycle while it was uninsured. I make this finding, not on the basis of the July 13, 2004 phone call between Mr. Prior and Primmum, or on any of the subsequent interaction between the parties, but on the adequacy of the purported termination of Mr. Prior’s insurance policy. I find that the June 16, 2004 notice, both in itself and in conjunction with the July 5, 2004 correspondence and related evidence, was defective in various ways and that the attempted cancellation of Mr. Prior’s policy was void ab initio. I find that any subsequent interaction between Mr. Prior and Primmum is irrelevant to the question of whether he knew or ought to have known that his motorcycle was uninsured at the time of the accident, given that his policy had not been properly cancelled.
The parties agree that the following provisions of Ontario Regulation 777/93, Statutory Conditions — Automobile Insurance, as it stood in 2004, applied to the cancellation of Mr. Prior’s insurance policy:
11(1) Subject to section 12 of the Compulsory Automobile Insurance Act and section 237 and 238 of the Insurance Act, this contract may be terminated by the insurer giving to the insured fifteen days notice of termination by registered mail or five days written notice of termination personally delivered.
(3) Where this contract is terminated by the insurer,
(a) the insurer shall refund the excess of premium actually paid by the insured over the proportionate premium for the expired time, but in no event shall the proportionate premium for the expired time be deemed to be less than any minimum retained premium specified; and
(b) the refund shall accompany the notice unless the premium is subject to adjustment or determination as to the amount, in which case, the refund shall be made as soon as practicable.
(5) The fifteen days mentioned in subcondition (1) of this condition begin to run on the day following the receipt of the registered letter at the post office to which it is addressed.
I find that the process Primmum followed in purporting to terminate Mr. Prior’s policy was flawed in a number of ways.
Statutory condition 11(1) states that an insurer shall give the insured “notice of termination.” I acknowledge the case of 3243567 Canada Inc. v. Old Republic Insurance Company of Canada, et al., [2002] I.L.R. I-4103 (Ont. S.C.J.), at paragraph 17, where Quinn, J. stated that statutory 11 “does not require Republic to have a reason before the insurance contract is cancelled.” I note, however, that section 12(1) of the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25, states, in part, that an insurer may only terminate a contract “for one or more of the following reasons,” including, as is the case here, the “non-payment of, or any part of, the premium due under the contract...”. In any event, even if it were the case that no reason was required, I find that simply any type of notice will not suffice. In this regard, I find the following comments of LaForme, J.A. in Transportaction Lease Systems Inc. v. The Guarantee Company of North America, 2005 CanLII 43896 (ON CA), [2005] 77 O.R. (3d) 767 (Ont. C.A.), at p. 771, to be instructive:
Although neither are automobile insurance cases, I find the analysis of the Supreme Court of Canada in Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888…and Scott v. Wawanesa Mutual Insurance Co., 1989 CanLII 105 (SCC), [1989] 1 S.C.R. 1445…to be instructive of the general interpretation of insurance contracts and the determination of co-insured’s rights under an insurance contract, respectively.
Justice Estey, writing for the majority in Consolidated-Bathurst, considered the normal rules of construction of contracts in construing an insurance contract at pp. 901-02 S.C.R.:
Even apart from the doctrine of contra proferentem as it may be applied in the construction of contracts, the normal rules of construction lead a court to search for an interpretation which, from the whole of the contract, would appear to promote or advance the true intent of the parties at the time of entry into the contract. Consequently, literal meaning should not be applied where to do so would bring about an unrealistic result or a result which would not be contemplated in the commercial atmosphere in which the insurance was contracted….[A]n interpretation which defeats the intentions of the parties and their objective in entering into the commercial transaction in the first place should be discarded in favour of an interpretation of the policy which promotes a sensible commercial result.
The general “commercial atmosphere” in which automobile insurance operates was discussed by the Supreme Court of Canada in Smith v. Co-operators General Insurance Company, 2002 SCC 30, [2002] 36 C.C.L.I. (3d)1, where Gonthier, J., writing for the majority, found that, in refusing to pay benefits claimed by an insured, the insurer must provide notice of the dispute resolution process in “clear and straightforward language, directed to an unsophisticated person,” given that “one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance” (at pp. 10 and 9, respectively). This is analogous to the principle that a denial to pay benefits will only trigger the running of a limitation period if the refusal was “clear and unequivocal.”8 In my view, the notice that terminates an insurance policy altogether must be at least as clear as the refusal that denies benefits under a subsisting policy.
For the following reasons, I find that the June 16, 2004 registered letter Primmum sent to Mr. Prior was not in “clear and straightforward language” and that, to allow Dominion to rely on this notice to preclude Mr. Prior from claiming the benefits, would not be a “sensible commercial result” in the circumstances.
The June 16, 2004 notice purports to terminate Mr. Prior’s policy for non-payment of premium, effective fifteen days from the receipt of the letter at the post office to which it is addressed. However, the notice also advises Mr. Prior that “following cancellation,” there is an “outstanding balance” of $68.40 to be paid “immediately.” The notice also advises that any “partial payment” does “not confirm” that the policy “has been reinstated.” It is unclear whether the policy has already been terminated or will be terminated once it is received at the post office to which it is addressed, whether the $68.40 is something that must be paid because the policy has been or will necessarily be terminated, whether the policy can be reinstated despite the “definitive” statement of termination after fifteen days, whether a partial payment of the $68.40 or some other amount can reinstate the policy, whether a full payment of $68.40 or some other amount can or will reinstate the policy, and when, precisely, the outstanding balance of $68.40 is due.
As stated by Borins, J.A., in a concurring judgment in Transportaction Lease Systems, supra, at pp. 777-8, the “notice of termination of a contract of insurance that an insurer is required to give an insured person is prospective in that it informs the insured that the contract will come to an end at the conclusion of a stipulated period of time” and that this is to “provide the insured with a reasonable opportunity to obtain replacement insurance.” As noted, the June 16th notice does not clearly state whether Mr. Prior’s policy has been, or will be, terminated and whether, or how, the policy can be reinstated, despite the stated fifteen day period. I find that the June 16th notice is not sufficient to constitute a “notice of termination” within the meaning of statutory condition 11(1).
The notice is flawed in other ways. The Canada Post “Track a Package” form indicates that Canada Post received the June 16th notice on June 16, 2004, that delivery was first attempted and a notification left on June 17, 2004, and that delivery was actually effected on June 23, 2004. Statutory condition 11(5) sets out the manner in which the fifteen days under condition 11(1) is to be determined, namely, fifteen days from the day following the “receipt of the registered letter at the post office to which it is addressed.” The notice was addressed to Mr. Prior at his home in Pefferlaw. I heard no evidence to the effect that the notice was addressed to the Canada Post location at which it was received on June 16, 2004, nor did I hear any evidence as to how or where it was initially received by Canada Post. In these circumstances, I am unable to determine the date from which the fifteen days began to run, and, consequently, the date on which any termination became effective.
Statutory condition 11(3) states that where an insurer terminates a policy, the insurer shall refund the “excess of premium actually paid by the insured over the proportionate premium for the expired time” and the refund “shall accompany the notice” unless the premium is subject to adjustment or determination. The June 16th notice indicated that Mr. Prior owed Primmum $68.40 and, therefore, did not attach a refund. However, on July 5, 2004, Primmum sent Mr. Prior a Credit Note, indicating that it owed Mr. Prior $119.45. That refund did not accompany the July 5 Credit Note and was never deposited in Mr. Prior’s account. I heard no evidence to the effect that the refund owing to Mr. Prior was subject to adjustment or determination, so that it could not accompany the June 16th notice. To the extent that Primmum’s witnesses understood the manner in which the $119.45 amount was determined, it appeared to be generated after Mr. Prior’s policy had already been cancelled, and, in any event, it was stated to be inaccurate. I find that the June 16th notice did not comply with statutory condition 11(3).
While perhaps of lesser significance, the notice misstates statutory condition 11(5) concerning the effective date of the purported termination, namely, fifteen days from the day after (not the day of) the receipt of the registered letter at the post office to which it is addressed.
Ms. McBride testified that Primmum would only reinstate a policy if it had been cancelled in error. I find that Primmum cancelled Mr. Prior’s policy in error and, as discussed more below, that Mr. Prior ought to have been advised of this fact. Mr. Aleong, Ms. Maheras and Ms. McBride all testified that Mr. Prior ought to have been advised that he could pay the full outstanding balance on his 2004 insurance premium, namely, $676.40, in order to avoid the cancellation of his policy, and that, instead of being advised of this, he was advised that his policy was being terminated and that he owed Primmum $68.40. I find that Primmum did not comply with its own process for terminating insurance policies and that, in conjunction with the deficiencies apparent on the face of the June 16th notice, this significantly undermines the validity of that notice. I note as well that the form sent to Mr. Prior “confirming” the cancellation of his policy (entitled “Your Automobile Insurance Policy”) stated that “no policy will be reinstated after two payments with non sufficient funds,” but that on October 7, 2004, Ms. McBride e-mailed Laurie Keefe at Primmum concerning the background to the cancellation of Mr. Prior’s policy, and advised as follows:
Client had 2 nsfs:
April 2nd and April 15th – standard procedure is to cancel for non-pay, however, we allowed client to continue on the payment plan.
To the extent that two of Mr. Prior’s payments had been returned NSF in April, this would be a further instance of Primmum not following its own procedures, and of Mr. Prior being misinformed that no insurance policy would be reinstated after two NSF payments. The letter advising of “no reinstatement” also conflicts with the June 16th notice which suggests that, under certain (unspecified) conditions, Mr. Prior’s policy could be reinstated despite the apparent cancellation for non-payment. Finally, in her October 7 email, Ms. McBride advises as follows:
Registered letter was sent to client on June 16th – advising full payment required by July 3rd or policy cancelled (normal procedures is [sic] to date 17 days ahead, allowing 2 days to reach post office as we must give 15 days written notice as per the statutory conditions)
Primmum did not advise Mr. Prior that the “full payment” was required, or specify that such a payment was due “by July 3rd.” Nor did Primmum “date” the registered letter “17 days ahead.” Again, I find that Primmum did not follow its own procedures in attempting to terminate Mr. Prior’s policy and that it cancelled his policy in error.
I also find that the timing of the purported termination was defective. Statutory condition 11(1) indicates that an insurance policy may be terminated by the insurer “giving to the insured” fifteen days notice of termination. In my view, the phrase in statutory condition 11(5) that the fifteen days runs in relation to “receipt of the registered letter at the post office to which it is addressed” does not necessarily displace the requirement of giving notice “to the insured.” I heard no evidence that Mr. Prior was seeking to avoid service of the notice. He signed for it four business days after the attempted delivery and notification on June 17, 2004. As noted above, I heard no evidence to the effect that the notice was addressed to the Canada Post location at which it was received on June 16, 2004, or any evidence as to how or where it was initially received by Canada Post. In these circumstances, and consistent with the proposition that notice of termination is designed to allow an insured a reasonable opportunity to obtain replacement insurance, I find that statutory condition 11(5) should not mean that it is simply a matter of Canada Post transferring a letter to another post office; the fifteen days should be determined in relation to the insured’s receipt of the notice. In the absence of the noted evidence, I find that the fifteen days began to run, at least, from June 24, 2004, the day following Mr. Prior’s receipt of the notice.
This is relevant to the July 5, 2004 correspondence from Primmum, purporting to confirm the termination of Mr. Prior’s policy. On July 5, 2004, Primmum sent Mr. Prior a letter stating that, pursuant to its previous correspondence (namely, the June 16, 2004 registered letter), his insurance policy “was cancelled.” In my view, this was both inaccurate and misleading. Given that the fifteen day period began to run on June 24, 2004, Mr. Prior’s policy would end as of July 9, 2004. At the hearing, Dominion maintained that Primmum had, in fact, cancelled Mr. Prior’s policy on June 16, 2004, but also that the cancellation was only effective July 5, 2004. In my view, the attempted cancellation would only take place on July 9, 2004, at the earliest. In either case, Primmum’s July 5, 2004 correspondence prematurely and, therefore, invalidly, confirmed the termination of Mr. Prior’s policy.
I find that the “subsequent evolution” of statutory condition 11 supports my finding that Primmum failed to give Mr. Prior notice of termination in an intelligible manner. I note the following from Ruth Sullivan in Sullivan and Driedger on the Construction of Statutes, Fourth Edition (Markham: Butterworths, 2002), at pp. 553 and 479-80 and 480, respectively, in respect of the weight to be given to the subsequent evolution of legislation in interpreting an earlier version of the statute:
It is obvious that reaching into the past and declaring the law to be different from what it was is a serious violation of rule of law. As Raz points out, the fundamental principle on which rule of law is built is advance knowledge of the law [footnote: J. Raz, “The Rule of Law and its Virtue” in The Authority of Law (New York: Oxford University Press), 1979]. No matter how reasonable or benevolent retroactive legislation may be, it is inherently arbitrary for those who could not know its content when acting or making their plans.
There are cases in which courts not only have considered subsequent evolution but have accorded it significant weight [footnote omitted]. However, most case law suggests this material should not be considered.
Although most courts have ruled that the subsequent evolution of legislation should not be looked at, there appears to be no principled reason to exclude this material. In so far as it can enhance or reduce the plausibility of a given interpretation, arguably it should be considered a legitimate aid.
While the adequacy of the termination process Primmum followed can be determined on the basis of the legislation and law at the time, given my view that it was not enough for Primmum to send out simply any notice, I find that the subsequent evolution of statutory condition 11 should be “considered a legitimate aid” in interpreting the 2004 version of that provision.9
Rather than violating the fundamental principle of “advance knowledge of the law,” I find that the subsequent evolution of statutory condition 11 supports my view of the context in which Primmum’s attempted termination of Mr. Prior’s policy should be understood, both in relation to consumer protection and to the commercially sensible result in the circumstances.
In this regard, statutory condition 11 was amended by Ontario Regulation 237/05, on June 1, 2005, to read, in part, as follows:
11(1) Subject to section 12 of the Compulsory Automobile Insurance Act and sections 237 and 238 of the Insurance Act, the insurer may, by registered mail or personal delivery, give to the insured a notice of termination of the contract.
(1.2) Subject to subcondition (1.7), if the insurer gives a notice of termination under subcondition (1) for the reason of non-payment of the whole or any part of the premium due under the contract or of any charge under any agreement ancillary to the contract, the notice of termination shall comply with subcondition (1.3) and shall specify a day for the termination of the contract that is no earlier than,
(a) the 30th day after the insurer gives the notice, if the insurer gives the notice by registered mail;
(1.3) A notice of termination mentioned in subcondition (1.2) shall,
(a) state the amount due under the contract as at the date of the notice;
and
(b) state that the contract will terminate at 12:01 a.m. of the day specified for termination unless the full amount mentioned in clause (a), together with an administration fee not exceeding the amount approved under Part XV of the Act, payable in cash or by money order or certified cheque payable to the order of the insurer or as the notice otherwise directs, is delivered to the address in Ontario that the notice specifies, not later than 12:00 noon on the business day before the day specified for termination.
(1.4) For the purposes of clause (a) of subcondition (1.3), if the insured and the insurer have previously agreed, in accordance with the regulations, that the insured is permitted to pay the premium under the contract in instalments, the amount due under the contract as at the date of the notice shall not exceed the amount of the instalments due but unpaid as at the date of the notice.
(1.5) If the full amount payable under clause (b) of subcondition (1.3) is not paid by the time and in the manner that the notice specifies, the contract shall be deemed to be terminated, without any further action being required on the part of the insurer, as of 12:01 a.m. of the day specified for termination.
(1.6) If the full amount payable under clause (b) of subcondition (1.3) is paid by the time and in the manner that the notice specifies, the contract shall not terminate on the day specified for termination and the notice shall have no further force or effect.
(1.7)(3)Where this contract is terminated by the insurer,
(a) the insurer shall refund the excess of premium actually paid by the insured over the proportionate premium for the expired time, but in no event shall the proportionate premium for the expired time be deemed to be less than any minimum retained premium specified;
(c) if the termination is for the reason of non-payment of the whole or any part of the premium due under the contract or of any charge under any agreement ancillary to the contract and if subcondition (1.7) does not apply to the termination, the refund shall be made as soon as practicable after the effective date of the termination.
(5) For the purpose of clause (a) of subconditions (1.1) and (1.2), the day on which the insurer gives the notice by registered mail shall be deemed to be the day after the day of mailing.
As is evident from this version of the legislation, and consistent with my finding on the nature of the notice required under the earlier version, termination of a policy can only be effected on the basis of clear and straightforward notice (as to the timing of the termination, the amount due on the policy and the circumstances under which the insured can avoid termination). I find that the June 16, 2004 notice failed to provide Mr. Prior with the requisite notice and that it was void ab initio.
I further find that the deficiencies in the June 16th notice significantly undermine Mr. Prior’s own evidence that he fully understood that his insurance had been cancelled. Mr. Prior only indicated that he understood the June 16th notice to say that his policy was cancelled after so many days. In my view, however, significantly more would need to be known by Mr. Prior to find that he fully appreciated the effect of the letter, namely, the timing of the termination, the amount due on the policy and the circumstances under which he could avoid termination. In terms of the various questions raised by the notice, there is no evidence to the effect that Mr. Prior understood whether the policy had already been terminated or would be terminated once it was received at the post office to which it was addressed, whether the $68.40 was something that needed to be paid because the policy had been or would necessarily be terminated, whether the policy could be reinstated despite the stated termination after fifteen days, whether a partial payment of the $68.40 or some other amount could reinstate the policy, whether a full payment of $68.40 or some other amount could or would reinstate the policy, and when, precisely, the outstanding balance of $68.40 was due. While Mr. Prior professed to fully understand the manner in which motorcycle insurance operated, I see nothing to indicate that he understood the process for terminating insurance in general or the meaning and effect of the June 16th notice in particular. I find that neither Mr. Prior nor an ordinary, rational person in Mr. Prior’s position would, or could, appreciate the nature or import of the June 16th notice.
This brings us to the July 5, 2004 letter and July 13, 2004 telephone conversation purporting to confirm the termination of Mr. Prior’s insurance policy. The July 5, 2004 letter stated that the policy had been cancelled, but as noted above, this was done prematurely. Either the June 16th notice or the July 5th letter, or both, led Mr. Prior to call Primmum on July 13, 2004 to inquire (according to Primmum’s log notes) what the “outstanding balance” was on his policy. Given Dominion’s position (and Mr. Prior’s own evidence) that he apparently understood that his policy had been cancelled, I find it significant that the note of the July 13th telephone call does not indicate that Mr. Prior called to ask how he could have his original policy reinstated or how he could obtain a new policy. In any event, even if Mr. Prior believed that his policy had been cancelled, I find that the July 13th phone call did not affect the validity of the termination, one way or the other. In this regard, I note the decision of Negash v. H. Later & Company Limited, et al., [1985] I.L.R. 1-1856 in which Haley, Co. Ct. J., stated as follows:
It makes no difference that Mr. Later advised the plaintiff orally that he had no coverage on September 1st, and the September 1st memo from Mr. Later to the plaintiff, while it might be construed as written notice of termination, was not delivered within the times prescribed in Statutory Condition No. 8 to be effective prior to the accident.
Dominion maintains that, in part on the basis of the July 13th phone call, Mr. Prior knew or ought reasonably to have known that his policy was no longer in effect at the time of the accident. However, assuming for the moment that Mr. Southin accurately recorded the substance of the conversation in his log note, it simply establishes that Mr. Prior was advised that he needed to send in $68.40 before he could obtain a new policy of insurance. It does not address any of the myriad problems regarding the manner in which Primmum had attempted to terminate Mr. Prior’s policy. In this regard, neither Mr. Southin nor anyone else at Primmum said anything to Mr. Prior about the fact that Primmum had not followed its own process for terminating Mr. Prior’s insurance policy. Mr. Southin was simply operating on the assumption that Mr. Prior’s policy had been properly terminated. I note as well that Mr. Southin did not confirm his advice to Mr. Prior in writing, in accordance with the process outlined in statutory condition 11 (although this was undoubtedly a function of Mr. Southin’s understanding that Mr. Prior’s policy had already been duly cancelled). In any event, as in Negash, the July 13thtelephone advice did not change the fact that Mr. Prior’s insurance policy had not been properly terminated in the first instance.
Immediately following the July 13th phone call, Mr. Prior couriered Primmum the $68.40. He said that he had been told that this would renew his insurance policy. I do not accept this. I find that Mr. Prior’s memory of events prior to the accident was more than adequate, and that he gave various, inconsistent answers to the issue of what he was told over the phone. He said that if he sent in the $68.40, it would bring his policy “back into good standing;” he said that his policy would be “reissued;” he said that a “new policy” would be issued; and he said that he “would be insured.” I note, as well, that, based on information Mr. Prior provided to his mother, she wrote a letter to the effect that he had been told that, after sending the $68.40, he should “ring the agent to have a new policy issued.” I note that Mrs. Patton gave several, inconsistent answers to the question of whether her son had read the letter before it was sent. In any event, while Mr. Prior and his mother suggested that he might not have been totally coherent at the time, I find the letter sufficiently detailed and consistent with the June 16th notice and the July 13th log note to conclude that it adequately represents what Mr. Southin told Mr. Prior over the phone. I, therefore, do not accept that Mr. Prior had been told that, by sending in the $68.40, he would either be insured or have his policy (automatically) brought back to good standing.
At the hearing, Mr. Prior argued that Mr. Southin’s log note of the July 13th phone conversation could not be relied upon for the truth of its contents, but only as a means to refreshing Mr. Southin’s memory. I do not find it necessary to enter into an analysis of what is a complicated and elusive area of the law. As noted above, I do not find the July 13th phone call to be directly relevant to the issue in this arbitration. In any event, I do not find the log note particularly reliable in itself. Mr. Southin admitted that it did not fully record the details of the conversation. The note does not state, as Mr. Southin testified, that Mr. Prior had asked how he could get a price on a new policy, and the note does not state, as both Mr. Prior and Mr. Southin testified, that Mr. Prior had asked if he could come into the office to pay the $68.40. As already discussed, I am satisfied that Mr. Southin likely did not advise Mr. Prior that sending in the $68.40 would automatically renew his insurance.
The issue, then, is why Mr. Prior was so intent on sending Primmum the $68.40. I find that, at the very least, Mr. Southin likely told Mr. Prior that he needed to send in the $68.40 before a new policy could be issued and that Mr. Prior wished to obtain a new policy as quickly as possible. The problem is that Mr. Prior did not confirm that Primmum had received the money order, for the purpose of either obtaining new insurance or of confirming that his previous policy had been renewed. He simply went on to ride his motorcycle and was involved in a tragic accident. Did Mr. Prior act recklessly in the circumstances? Yes he did. But the issue in this case is not whether Mr. Prior acted unreasonably in riding his motorcycle while it might not have been insured, but whether he knew or ought reasonably to have known that he was riding his motorcycle while it was not insured. I have already found that Primmum failed to properly cancel Mr. Prior’s insurance policy. I, therefore, conclude that it was irrelevant that Mr. Prior behaved recklessly in light of the correspondence and telephone advice he had received from Primmum.
Finally, there were both phone calls and correspondence following the accident suggesting that Mr. Prior believed he did not have insurance at the time of the accident, or at least might not have had insurance at the time of the accident. While Mr. Prior was clearly suffering in the weeks and months following the accident, I find he was sufficiently well to call Primmum to inquire about the status of his insurance at the time of the accident. Based on Primmum’s August 25, 2004 log note that Mr. Prior had called about the status of his policy, I do not accept his testimony that, approximately three to four months after the accident, he learned that he might not have been insured. Nevertheless, I reiterate that, whether Mr. Prior believed that he was not, or might not have been, insured at the time of the accident does not alter the fact that Primmum had not properly cancelled Mr. Prior’s insurance policy in the first instance.
I, therefore, conclude that Dominion has not discharged the onus on it of showing that Mr. Prior knew or ought reasonably to have known that, at the time of the accident, he was operating his motorcycle while it was uninsured.
EXPENSES:
The parties did not address the issue of expenses of the preliminary issue hearing. If required, the parties may make submissions on this issue in accordance with the procedure set out in Rule 79 of the Dispute Resolution Practice Code.
November 6, 2008
Eban Bayefsky
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 179
FSCO A07-001147
BETWEEN:
GEOFFREY PRIOR
Applicant
and
DOMINION OF CANADA
GENERAL 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:
- Dominion is not entitled to deny Mr. Prior benefits pursuant to section 30(1)(a) of the Schedule.
November 6, 2008
Eban Bayefsky
Arbitrator
Date
1 The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2 There is no dispute that a motorcycle comes within the definition of “automobile” under sections 1 or 224 of the Insurance Act.
3 As noted above, Mr. Prior has commenced a tort action against the driver and owner of the other vehicle involved in the accident (with Dominion acting on their behalf, represented by James Davidson) and a contract action against Primmum (represented by Peter Kazdan) in which he is seeking a declaration that he was insured by Primmum at the time of the accident. My understanding is that a priority dispute had arisen earlier between Dominion and Primmum, and that this matter was resolved in January 2005, with Dominion agreeing to pay certain benefits.
4 See, for example, Markoski and State Farm Mutual Automobile Insurance Company (FSCO A05-002466, August 2, 2007).
5 See, for example, Jacobs and Economical Mutual Insurance Company (OIC A-004394, June 16, 1994), Verrette and Liberty Mutual Fire Insurance Company (FSCO A00-000644, July 13, 2001), Nwakwesi and Security National Insurance Company (FSCO A00-000607, January 8, 2001) and Markoski, ibid.
6 The premiums were $164.47 per month, for seven months (which was the riding season for motorcycles), withdrawn automatically from Mr. Prior’s bank account in accordance with a pre-authorized payment plan.
7 Mrs. Patton wrote her own letter on October 23, 2004 and, in it, she urged Primmum to take immediate action in providing her son with badly needed medical and rehabilitation assistance.
8 See, for example, Veldhuizen and Coseco Insurance Company (OIC A-015549, October 12, 1995) and Reid and State Farm Mutual Automobile Insurance Company (FSCO A07-000498, September 30, 2007).
9 This is similar to my finding in Weerasooriya-Epps and Economical Mutual Insurance Company, et al. (OIC A96-002061, May 22, 1998), where I stated as follows:
In my view, these decisions suggest that the process of renewal and cancellation of automobile insurance policies, including the alteration of principal elements of such policies, must be effected upon proper notice to the insured and/or with the insured’s consent. This is particularly true in relation to a person’s status as a named insured….It is also consistent with the Compulsory Automobile Insurance Act, R.S.O. 1980, c. 83, section 12, and the Insurance Act, R.S.O. 1980, c. 218, section 207, statutory condition number 8 (as those two Acts stood at the relevant periods), which imposed notice requirements on the process of terminating contracts of insurance. Subsequent versions of these statutes have reinforced an insurer’s obligation to provide notice of changes to existing policies.