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

Neutral Citation: 2010 ONFSCDRS 22

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BETWEEN:

ERSIN AKSOY

Applicant

and

MARKEL INSURANCE COMPANY OF CANADA

Insurer

Before: Fred Sampliner

Heard: July 28, 29, August 14, September 18, October 28, 2009 at the Financial Services Commission

Appearances: Wendy Sokoloff and Douglas Wright for Mr. Aksoy Jamie Pollack for Markel Insurance Company of Canada

Issues:

The Applicant, Ersin Aksoy, sustained serious injuries in a motor vehicle accident on December 27, 2006. He received some categories of statutory accident benefits from Markel Insurance Company of Canada (“Markel”), payable under the Schedule.¹ Markel refused to pay him income replacement benefits and housekeeping expenses, and Mr. Aksoy applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is Mr. Aksoy precluded by subsection 30(1)(a) of the Schedule from receiving income replacement benefits and housekeeping expenses because he knew or ought reasonably to have known that he was operating the automobile while it was not insured under an automobile insurance policy?

Result:

Mr. Aksoy is not precluded from receiving income replacement benefits or housekeeping expenses.

EVIDENCE AND ANALYSIS:

This exclusion question depends on whether the facts demonstrate Mr. Aksoy knew or ought reasonably to have known that he was operating his automobile without insurance. Markel bears the burden to establish this exclusion on a balance of probabilities.

Background:

On December 27, 2006, Mr. Aksoy was driving his 1998 Jeep Grand Cherokee on Highway 401 in Toronto with his two children in the back seat when he lost control of the vehicle due to the icy road conditions. He collided with a tractor trailer that was travelling in the same direction, and as a result of his serious accident injuries he has since been wheelchair-bound.

Mr. Aksoy had been a construction worker in his native Turkey before he immigrated to Canada in 2003. His wife and children followed him to Canada in June 2006. He speaks little English.

Mr. Aksoy owned and operated a small stucco contracting business in Toronto before the accident. He bought the Jeep he operated at the time of the accident in early 2006, and purchased automobile insurance with Kingsway General Insurance Company (Kingsway) in early February 2006 through Holman Insurance Brokers Ltd. (Holman). Mr. Murat Dogan was the agent at Holman who sold Mr. Aksoy his policy, and they communicated in their native Turkish language.

Mr. Aksoy lived in a rented room in Alliston Ontario at the time he purchased the Kingsway policy. He moved to Toronto at an unspecified date during mid-2006.

Mr. Aksoy failed to make Kingsway’s insurance premium payment shortly after the policy was written. Automobile insurers are required to give policyholders written notice of cancellation for non-payment by registered mail to their last known address², and Kingsway promptly issued Mr. Aksoy a cancellation notice to the Alliston address it had on record.

Markel submits that Mr. Aksoy received Kingsway’s cancellation notice and that he was subsequently told by Mr. Dogan that he did not have insurance. Markel argues these facts prove on balance Mr. Aksoy knew or ought to have known he did not have insurance at the time of the accident.

Mr. Aksoy denies he received Kingsway’s registered letter or that Mr. Dogan told him the policy was cancelled. He alleges he gave Mr. Dogan sufficient money to pay for his continuing insurance coverage during 2006.

Kingsway wrote Mr. Aksoy’s policy, but it is not the defending insurance company in this arbitration because Markel handled Mr. Aksoy’s claims for accident benefits.³ Mr. Cecil Jaipaul for Kingsway and Mr. Murat Dogan from Holman were Markel’s witnesses and they gave evidence concerning Mr. Aksoy’s insurance.

Kingsway’s Policy Cancellation:

Mr. Dogan helped Mr. Aksoy complete the application forms for Kingsway’s policy at his office in early February 2006, and he received cash to initially write the policy. Mr. Aksoy agreed at that time to the $188.18 monthly automatic deduction of the ongoing premiums from his bank account.

Mr. Aksoy testified that Mr. Dogan called him in May or June 2006 to notify him that Kingsway had not received the subsequent bank withdrawal to cover his premium payment. Mr. Aksoy could not explain why his bank account did not have sufficient funds. There is no evidence he made a direct payment to Kingsway, Holman or that his bank account had sufficient funds in the spring of 2006 to pay the monthly amount due under his agreement. I am satisfied that Mr. Aksoy did not pay the premiums on his automobile insurance with Kingsway.

Mr. Cecil Jaipaul testified that Kingsway sent Mr. Aksoy a notice of cancellation for non-payment of his insurance premium in accordance with its normal business practices and the statutory procedure.⁴ Mr. Jaipaul authenticated Kingsway’s May 5, 2006 letter addressed to Mr. Aksoy at the Alliston address he used on his insurance application and the original envelope containing the cancellation letter that was sent by registered mail. Mr. Jaipaul’s testimony and Kingsway’s documents satisfy me that it followed the appropriate statutory procedure to cancel Mr. Aksoy’s coverage for non-payment.⁵

Mr. Aksoy denies he received Kingsway’s May 5, 2006 registered letter notifying him that his automobile insurance policy was being cancelled. He testified he had moved to a Toronto apartment to accommodate his family, but he did not specify a date or produce documents about his tenancies.

Canada Post’s two scanned receipt verifications contain signatures. One is illegible and the other clearly bears the signed name “Veronica.”

Markel contends that Canada Post’s verifications alone are sufficient evidence that Mr. Aksoy or someone he authorized to act for him picked up Kingsway’s registered letter, and therefore knew he did not have insurance at the time of the accident. Case law has established that this issue is an individualized inquiry of the entire circumstances, rather than whether Kingsway satisfied the statutory requirement to send Mr. Aksoy the cancellation notice by registered mail.⁶ Thus, I reject Markel’s position that satisfaction of an insurer’s statutory requirement for policy cancellation equates with Markel’s burden to prove Mr. Aksoy knew or reasonably ought to have known he did not have insurance.

First, the two Canada Post return verification forms do not show Mr. Aksoy’s printed name or legible signature on either document to show he signed to receive the envelope, and no one from Canada Post testified they saw Mr. Aksoy or his agent pick up the letter or attest he appeared at the Alliston Canada Post office to sign one of the receipts. Second, it is unlikely Mr. Aksoy received Kingsway’s May 5, 2006 letter because Canada Post returned the registered envelope marked “moved/unknown.”

Kingsway’s original envelope has been slit open at the top and taped shut by an unknown person. Markel requested an order to allow forensic analysis of Kingsway’s envelope to determine whether Mr. Aksoy’s fingerprints were on it. Kingsway and Mr. Aksoy objected.

An adjournment for the parties to complete separate forensic analysis of this evidence would have significantly delayed the hearing progress, and there is no evidence to suggest Mr. Aksoy touched it. I refused to allow anyone to tamper with Kingsway’s envelope at the hearing, and did not grant Markel’s request.

Mr. Aksoy’s denial of receipt for the envelope is supported by the return of the envelope to Kingsway with a “moved/unknown” stamp and the lack of his signature on the Canada Post receipt documents. I accept Mr. Aksoy’s denial. I find Mr. Aksoy did not attend at the Alliston Canada Post office to pick up Kingsway’s registered letter, and that Markel has not established on balance that he received the May 5, 2006 notice cancelling his automobile insurance policy.

The obvious reason Mr. Aksoy failed to receive Kingsway’s communication is that he did not notify Kingsway in writing that he moved to Toronto. While I agree he should have promptly notified Kingsway or Holman he moved, the question before me is not whether he intentionally failed to notify Kingsway of a change in material risk on the policy.⁷ Mr. Aksoy’s move is irrelevant to his knowledge of whether he was insured at the time of the accident.

Mr. Aksoy and Mr. Dogan meet:

Markel contends that Mr. Aksoy knew he did not have insurance after he met with Mr. Dogan in late July 2006. Kingsway sent Holman a copy of the May 5, 2006 cancellation notice, and it is not disputed that Mr. Dogan subsequently called Mr. Aksoy about his insurance situation. Their versions of the events that summer differ significantly.

Mr. Dogan testified he first learned Mr. Aksoy’s policy had been cancelled between June 15 and 17, 2006 by e-mail from the customer service department. He spoke to Kingsway on June 21, 2006, confirming the policy was cancelled. He said he received instructions to collect the outstanding balance Mr. Aksoy owed before a new policy could be written.

Mr. Dogan testified that on June 21, 2006 he called Mr. Aksoy and told him Kingsway’s policy was cancelled. Mr. Dogan stated that Mr. Aksoy told him he had not received Kingsway’s cancellation letter, and they never discussed his move to Toronto.

Mr. Dogan stated he told Mr. Aksoy Kingsway required a substantial sum to re-write the policy, but his evidence about exactly what he explained had occurred with the old policy was unclear. He recalled Mr. Aksoy told him he could not afford to pay due to the financial burden bringing his family to Canada. Mr. Dogan suggested he obtain other auto insurance.

Mr. Dogan testified he received either two or three calls from Mr. Aksoy afterwards to discuss the problem after they spoke on the phone. Mr. Dogan admitted he was supposed to contemporaneously document the dates and substance of his conversations with Mr. Aksoy, and admits there are no records of these discussions.

The most important part of Mr. Dogan’s and Mr. Aksoy’s evidence surrounds their summer 2006 meeting. Essentially, Mr. Dogan’s evidence is that Mr. Aksoy paid him $211.58 cash for Kingsway’s past due bill, and that he went away with the understanding he needed to obtain a new insurance policy. Mr. Aksoy denies Mr. Dogan explained the cancellation, and that he paid him a much larger cash sum for his continuing automobile insurance coverage.

Mr. Dogan testified Mr. Aksoy came to his apartment on either July 29 or 30, 2006. There is a July 31, 2006 receipt from Holman to support Mr. Dogan’s statement he received $211.58 cash from Mr. Aksoy. However, he did not explain why Mr. Aksoy gave him this amount rather than the $238.18 that Kingsway billed in its cancellation letter.

Mr. Dogan did not give Mr. Aksoy a receipt for the $211.58 cash at their meeting or provide him one at a later date, although the money was sent to Kingsway. He did not document his discussions with Mr. Aksoy at his apartment, and his cross-examination revealed he did not have a clear recollection specifically what he said to Mr. Aksoy about the status of the Kingsway policy at their meeting.

Mr. Dogan testified he visited Mr. Aksoy in the hospital after the accident. He asserts Mr. Aksoy explicitly said he knew he did not have insurance, but no independent witnesses were called to support his evidence and he did not document the conversation date or substance.

Mr. Dogan admits he was supposed to document the dates and substance of his contacts with Mr. Aksoy in accordance with Holman’s normal business practices. His failure to document his business discussions and meetings with Mr. Aksoy undermines Markel’s position that Mr. Dogan’s memory of these events is more reliable than Mr. Aksoy’s.

Mr. Aksoy admits he has health problems that affect his memory, and health care reports document this is related to his injuries from the accident. In his evidence, Mr. Aksoy’s name recall was poor and he could not accurately recall events while he was in the hospital immediately post-accident.

However, Mr. Aksoy did not appear to be particularly confused during his evidence concerning the events of his life before the accident. He was neither hesitant nor contradictory. Thus, I do not diminish the value of Mr. Aksoy’s evidence concerning his pre-accident dealings with Mr. Dogan on the basis of his health, and weigh the consistency of these witnesses’ testimony equally.

Mr. Aksoy recalled Mr. Dogan phoning him sometime during late May or June 2006. He denied Mr. Dogan told him his policy was cancelled or that they discussed Kingsway’s notice letter. Mr. Aksoy says he told Mr. Dogan he had moved to Toronto.

Mr. Aksoy says Mr. Dogan portrayed the problem as one of Kingsway being unable to deduct premium payments from his bank account. Mr. Dogan chastised him, and Mr. Aksoy defended that he was busy with work and did not keep track of his account balance.

Mr. Aksoy testified he made an appointment to go to Mr. Dogan’s apartment after work one evening shortly thereafter to discuss the problem. He did not recall the date of their meeting.

Mr. Aksoy stated he carried three or four thousand dollars cash in his pocket for his usual work in the construction business at that time. He paid Mr. Dogan between $900 and $1,200 cash for the full amount of the insurance, $250 being a penalty for Kingsway to reinstate the policy. Mr. Aksoy did not ask for or receive any document substantiating he paid that amount or what he was paying for.

Conclusion:

There are no independent witnesses to corroborate Mr. Aksoy’s or Mr. Dogan’s versions about what happened that evening. On the one hand, Mr. Aksoy’s bald assertion he made a large cash payment to Mr. Dogan towards the policy premium appears improbable because he has no substantiating documentation to support his allegation. On the other hand, Mr. Dogan’s evidence that they met solely to pay Kingsway’s past bill is not plausible either because it is unlikely Mr. Aksoy would take time during the busy construction season to pay this relatively small amount if his policy was cancelled.

Mr. Dogan vacillated attempting to remember the dates and number of his telephone calls with Mr. Aksoy. His lack of documents to refresh his recollection about the calls and argumentativeness about the dates and substance of his conversations with Mr. Aksoy causes me to discount his evidence.

Consequently, I do not accept Mr. Dogan’s evidence he specifically told Mr. Aksoy over the telephone his automobile insurance was cancelled. For the same reasons, I reject Mr. Dogan’s evidence about what occurred during his meeting with Mr. Aksoy that summer. I find Mr. Dogan did not clearly explain to Mr. Aksoy at their summer 2006 meeting or at any time before the accident that his Kingsway automobile insurance policy was cancelled.

Markel contends Mr. Aksoy’s assertion he paid a substantial cash sum to Mr. Dogan that evening is not credible since he did not file a police complaint or lawsuit. Mr. Aksoy’s failure to pursue legal remedies does not undermine his evidence because a police complaint or lawsuit was pointless without some minimal documentation.

Mr. Aksoy did not ask for payment documentation from Mr. Dogan at their meeting because he trusted him. Mr. Dogan had initially helped complete the formal paperwork for Mr. Aksoy’s policy with Kingsway, and the evidence is clear Mr. Aksoy was not familiar with the formalities of insurance in Canada. I draw the reasonable inference that Mr. Aksoy relied on Mr. Dogan for automobile insurance.

Mr. Aksoy’s evidence that he went to Mr. Dogan’s home to arrange his insurance is compelling. Logically, he would not go there simply to pay an old bill. I accept Mr. Aksoy relied on Mr. Dogan to clearly explain matters and further that he did not understand the status of the Kingsway policy from the way Mr. Dogan explained he merely had a payment problem. Therefore, Mr. Aksoy’s evidence that he did not know his Kingsway policy was cancelled before the accident is plausible, and I accept it. I reject Mr. Dogan’s testimony that Mr. Aksoy admitted to him in hospital he knew he was driving without insurance at the time of the accident based on the lack of independent corroboration from available witnesses to this alleged conversation.

My opinion is not dependent on the amount Mr. Aksoy paid Mr. Dogan when they met. There is no documentation he paid any amount beyond the $211.58, and Mr. Aksoy candidly admits he is unsure of the amount. I am unwilling to speculate he paid $900, $1,200 or any amount in between.

Mr. Dogan did not provide a clear explanation the policy was cancelled and Mr. Aksoy did not receive Kingsway’s cancellation notice. I therefore accept he reasonably believed his Kingsway policy continued when he paid the requested money to Mr. Dogan. I find that Markel has not established Mr. Aksoy knew or ought reasonably to have known that he was operating his automobile without insurance at the time of the accident under subsection 30(1)(a) of the Schedule.

EXPENSES:

I exercise my discretion to award Mr. Aksoy his expenses incurred in this preliminary issue hearing. The parties should attempt to resolve the amount of expenses on their own before they contact the Case Administrator to arrange an expense hearing.

February 25, 2010

Fred Sampliner Arbitrator

Date