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

Neutral Citation: 2009 ONFSCDRS 104

FSCO A07-002733

BETWEEN:

HASEEB TARIQ Applicant

and

MOTOR VEHICLE ACCIDENT CLAIMS FUND Insurer

Before: Elizabeth Nastasi

Heard: June 10, 2009, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Daniel Flatt for Mr. Tariq Robert W. Kerkmann for Motor Vehicle Accident Claims Fund

Issues:

The Applicant, Haseeb Tariq, was injured in a motor vehicle accident on May 6, 2006. He applied for statutory accident benefits from the Motor Vehicle Accident Claims Fund (“the Fund”), payable under the Schedule.¹ Disputes arose in relation to the benefits claimed and the parties were unable to resolve their disputes through mediation. Mr. Tariq applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The Fund’s position is that it is not an insurer within the meaning of section 268 of the Insurance Act and section 2 of O. Reg. 283/95 to the Insurance Act (“Priority Regulation”) as there was not a sufficient nexus between the Fund and the Applicant. In the alternative, the Fund argued that it did not receive a completed Application for Accident Benefits from the Applicant.

The preliminary issue is:

Is the Motor Vehicle Accident Claims Fund the first insurer to receive Mr. Tariq’s completed Application for Accident Benefits pursuant to section 2 of O. Reg. 283/95 to the Insurance Act?

Result:

The Motor Vehicle Accident Claims Fund is not the first insurer to receive Mr. Tariq’s completed Application for Accident Benefits pursuant to section 2 of O. Reg. 283/95 to the Insurance Act.

EVIDENCE AND ANALYSIS:

The Law

In respect to liability, subsection 268(3) of the Insurance Act states that:

An insurer against whom a person has recourse for the payment of statutory accident benefits is liable to pay the benefits.

The accident benefits scheme provides for a timely resolution of priority disputes under O. Reg. 283/95. Section 2 of the Priority Regulation provides that the first insurer that receives a completed Application for Accident Benefits is responsible for paying benefits to an insured person. This “first insurer” is required to adjust the claim and continue to pay any benefits owing pending the resolution of any dispute as to which insurer is required to pay benefits under section 268 of the Insurance Act.

Section 3 of O. Reg. 283/95 provides as follows:

3(1) No insurer may dispute its obligation to pay benefits under section 268 of the Act unless it gives written notice within 90 days of receipt of a completed application for benefits to every insurer who it claims is required to pay under that section.

(2) An insurer may give notice after the 90-day period if,

(a) 90 days was not a sufficient period of time to make a determination that another insurer or insurers is liable under section 268 of the Act; and

(b) the insurer made the reasonable investigations necessary to determine if another insurer was liable within the 90-day period.

Background

The facts of the case are not in dispute. Mr. Tariq was injured in a motor vehicle accident on May 6, 2006 while driving a rental car. He collided with the car in front of him which was being driven by a friend who was also driving a rental car. The police attended and Mr. Tariq’s evidence was that he gave the police a copy of the car rental agreement.

Mr. Tariq testified that after the accident he was experiencing pain in his back and went for physiotherapy treatment. The therapist referred him to his lawyer, Mr. Gary Mazin, who subsequently assisted him in submitting an OCF-1 on October 6, 2006.² Mr. Tariq’s claim was made against the Fund.

By letter dated October 11, 2006³, the Fund informed Mr. Tariq’s lawyer that it was not able to consider his claim as he was driving a rental car which was insured. The letter also noted that since the other vehicle in the accident was also a rental car, it would also have been insured. The Fund also requested that Mr. Tariq comply with the Motor Vehicle Accident Claims Act⁴ and provide a copy of the police report and a completed Form 3.⁵

On September 25, 2008, almost 2 years later, the Fund received Mr. Tariq’s completed Form 3 as sent by his lawyer, Mr. Mazin. The section of the Form 3 that requests the name of the insurer was filled in with “unknown/TBD.”⁶

On December 19, 2008 the Fund received a copy of the Police Report ⁷ – this was more than 2 years after the initial Application for Accident Benefits was completed by Mr. Tariq.

The Parties’ Positions

The Fund’s position is that there was not sufficient nexus between themselves and the Applicant for the Fund to be considered an insurer within the meaning of sections 268 of the Insurance Act and section 2 of O. Reg. 283/95 to the Insurance Act. In addition, the Fund maintains that it did not receive a completed application because of the absence of a police report and a completed Form 3.

The Applicant’s position is that he made reasonable efforts to obtain information about the insurer of the rental car. Further, he argued that the Fund also has an obligation to make efforts and inquiries to obtain the information. Since there was no evidence presented to detail any attempts on the part of the Fund to obtain the police report, the Applicant submits that the Fund has not satisfied the requirements placed on it by the legislation.

Nexus

The Fund submits that in order to satisfy the requirements of section 2 which requires the first insurer to receive a completed application to pay pending the resolution of a priority dispute, there must be a nexus between an applicant and the recipient of a completed Application for Accident Benefits. The Fund submits that in order to establish a nexus in this case, the Applicant has to have a reasonable belief that there is no insurance available from any other source.

The principle that there must be a sufficient nexus between an applicant and insurer to trigger an obligation to pay benefits was first expressed by Senior Arbitrator Rotter in Brown and Allstate Insurance Company of Canada.⁸ The approach in Brown was upheld and endorsed by the Divisional Court and has been applied in several FSCO arbitration and appeal decisions.⁹

In Vieira and Royal & SunAlliance Insurance Company of Canada and Chubb Insurance Company of Canada¹⁰, the Director of Arbitrations held that the threshold for establishing a nexus is not a high one but it cannot be arbitrary. There must be some link established between the Applicant and the choice of insurer. In Valauskas and MVAC Fund and Wawanesa Mutual Insurance Company¹¹ Arbitrator Rogers found that:

There must be some basis for the applicant believing that the insurer to which the application is submitted is required to pay benefits. Where the application is submitted to the Fund, there must be some basis for the applicant’s belief that coverage is not available under an insurance policy.

In Valauskas, Arbitrator Rogers notes that the applicant was completely silent on the issue of insurance coverage. He had provided no information at all on how he concluded that recovery was not available to him from either the insurer of the vehicle in which he was a passenger or the insurer of the other vehicle involved in the accident. Arbitrator Rogers found that the applicant was required to consider those sources of recovery before he could turn to the Fund. Although the information on insurance coverage was readily available by obtaining the police report, Mr. Valauskas provided no explanation for his failure to obtain the report.

The facts of the case before me are very similar to those of Valauskas. During his testimony, Mr. Tariq acknowledges that he was aware that a rental car would have had insurance coverage. Mr. Tariq’s evidence was that although he was aware that the rental car would have been insured, he had difficulty in obtaining the name of that insurer. His evidence was that he made several inquiries with the rental car agency and that they would not provide him with the name of the insurer. He did not make any attempts to identify the name of the insurer of the rental car that his friend was driving.

In terms of obtaining the police report, Mr. Tariq’s evidence was that he was not aware he would have been able to obtain the report. The evidence provided in respect of the efforts made by Mr. Tariq’s counsel to obtain this information included 2 letters — the first, dated September 25, 2008 written to the car rental company and the second, a letter dated September 26, 2008 written to the Toronto Police Service requesting a copy of the police report. There was no evidence presented that there were any attempts made by Mr. Tariq’s counsel to request and obtain the Police Report prior to the September 26, 2008 date.

The police report was obtained by the Applicant and sent to the Fund on December 19, 2008. The police report is dated May 8, 2006 – 2 days after the accident occurred. There was no explanation provided as to the reason for the 2 year delay in obtaining the report. Further, there was no evidence presented that neither the Applicant nor his counsel encountered any difficulties in requesting or obtaining the Police Report.

I find that Mr. Tariq’s decision to send his completed application to the Fund was arbitrary given the limited efforts he made to determine the insurer of the rental car in this case. His efforts in attempting to obtain the name of the insurer do not meet the threshold of establishing a nexus between himself and the Fund.

As a result, I find that the Fund is not an “insurer” within the meaning of section 268 of the Insurance Act and section 2 of the Priority Regulation and it is not required to respond to Mr. Tariq’s Application for Accident Benefits.

Completed Application

Since I have found that the Fund is not an insurer, I find that it is not necessary to deal with the alternative argument advanced by the Fund namely that they did not receive a “completed” Application for Accident Benefits.

EXPENSES:

The parties made no submissions on expenses. Should the parties be unable to resolve the issue of expenses, any party may make an appointment before me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

July 22, 2009

Elizabeth Nastasi Arbitrator

Date