Intact Insurance Company v. The Dominion of Canada General Insurance Company et al.

[Indexed as: Intact Insurance Co. v. Dominion of Canada General Insurance Co.]

Ontario Reports Ontario Superior Court of Justice Lemay J. December 18, 2020 154 O.R. (3d) 781 | 2020 ONSC 7982

Case Summary

Arbitration — Judicial review — Standard of review — Insured having been in committed five-year relationship after separating from her husband — Insured and current partner maintaining separate residences — Insured injured while a passenger on partner's motorcycle — Insured claiming under partner's insurance rather than under her own or her husband's — Arbitrator finding insured and her partner to be spouses such that partner's insurer was obliged to pay claim — Arbitrator committed an extricable error of law in defining spouse such that standard of review was correctness — Arbitration Act, 1991, S.O. 1991, c. 17, s. 45.

Insurance — Automobile insurance — Arbitration — Disputes between insurers — Insured having been in committed five-year relationship after separating from her husband — Insured and current partner maintaining separate residences — Insured injured while a passenger on partner's motorcycle — Insured claiming under partner's insurance rather than under her own or her husband's — Arbitrator finding insured and her partner to be spouses such that partner's insurer was obliged to pay claim — Insurer's appeal allowed — Arbitrator erred by applying family law principles to definition of spouse for insurance purposes and by not following bright line test requiring parties to live together for three years before being considered spouses — Insurance Act, R.S.O. 1990, c. I.8, s. 224(1).

A motorcycle passenger was injured. At the time of the accident, she and the driver of the motorcycle had been in a committed five-year relationship even though they maintained separate residences and the passenger was still married to, but separated from, her husband, who was insured by one of the respondents, W. The passenger was insured by the other respondent, D. The driver was insured by the applicant. The passenger claimed against the applicant, stating that she was single and identifying the driver as her friend rather than as her spouse. The applicant put both respondents on notice that it wished to dispute priority. An arbitrator found that the driver and passenger were spouses for the purposes of the Insurance Act such that the applicant was obliged to pay the passenger's claim. The applicant appealed.

Held, the appeal should be allowed.

The standard of review was correctness. The legislature had specifically required insurers to resolve priority disputes through arbitration. The Arbitration Act provided for an appeal either with or without leave. The parties used the statutory framework to agree that a party challenging the arbitrator's decision was entitled to do so by way of an appeal without leave. The arbitrator's determination of the meaning of "spouse" was a question of mixed fact and law, but there was an extricable error of law such that the standard was correctness. In any event, the arbitrator's decision would not even have met a reasonableness standard. [page782]

The arbitrator erred in her analysis of the governing legal principles. The first error was in finding that family law principles applied to the definition of spouse under the Insurance Act. The second was in distinguishing binding appellate authority, which provided a bright line test that required parties to have lived together in the same residence for three years before they could be considered spouses.

Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65; Housen v. Nikolaisen, 2002 SCC 33; Royal & Sun Alliance Insurance Co. of Canada v. Desjardins Insurance Group, 2018 ONSC 4284, apld

Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., [1997] 1 S.C.R. 748, 1997 SCC 385; Catherwood v. Young Estate (1995), 27 O.R. (3d) 63; Economical Mutual Insurance Co. v. Lott (1998), 37 O.R. (3d) 417; ING Insurance Co. of Canada v. Co-Operators Insurance Co., 2013 ONSC 4885; Intact Insurance Co. v. Allstate Insurance Co. of Canada, 2016 ONCA 609; Travelers Insurance Co. v. CAA Insurance Co., 2020 ONCA 382, consd

Miron v. Trudel, [1995] 2 S.C.R. 418, 1995 SCC 97; Smith v. Co-operators General Insurance Co., 2000 ONCA 4138, distd

Other cases referred to

Dominion of Canada General Insurance Co. v. State Farm Mutual Automobile Insurance Co., 2018 ONCA 101; Unifund Assurance Co. v. Dominion of Canada General Insurance Co., 2018 ONCA 303

Statutes referred to

Arbitration Act, 1991, S.O. 1991 c. 17 [as am.], s. 45 [as am.], (1), (2), (3) Canadian Charter of Rights and Freedoms, ss. 1, 15 Family Law Act, R.S.O. 1990, c. F.3 [as am.] Insurance Act, R.S.O. 1990, c. I.8 [as am.], ss. 224(1) [as am.], 286(2)1.

Rules and regulations referred to

Disputes Between Insurers, O. Reg. 283/95, s. 7(1) [as am.] Statutory Accident Benefits Schedule, O. Reg. 34/10, s. 3(1) [as am.] [page783]

APPEAL from an arbitrator's decision in an insurance priority dispute.

Lori J. Sprott and Joseph Lin, for applicant (appellant in Appeal). Christopher J. Schnarr, for respondent, The Dominion of Canada General Insurance Company. Paul Omeziri, for respondent, Wawanesa Mutual Insurance Company.

Endorsement

[1] LEMAY J. : — This is an appeal from the decision of Arbitrator Philippa Samworth. In her decision, the Arbitrator adjudicated a priority dispute between the appellant, Intact Insurance Company ("Intact") and the respondents, The Dominion of Canada General Insurance Company ("Dominion") and Wawanesa Mutual Insurance Company ("Wawanesa").

[2] The dispute arises out of an accident that took place on June 1, 2014 when the claimant, Tammy Amsinga was injured while riding as a passenger on the motorcycle owned and being driven by William Schram.

[3] Ms. Amsinga and Mr. Schram had been in a committed five-year relationship at the time of the accident. However, at the time of the accident Ms. Amsinga was still married to (but separated from) Jason Munro. In addition, Ms. Amsinga and Mr. Schram maintained separate residences.

[4] The parties agreed that Ms. Amsinga could claim against Dominion in first priority as she was a named insured on a policy of insurance with Dominion. The parties also agreed that Ms. Amsinga could claim against Wawanesa in first priority, as Mr. Munro was a named insurer and Ms. Amsinga was still married to Mr. Munro.

[5] However, Ms. Amsinga claimed against Mr. Schram, who was insured by Intact. Ms. Amsinga could only claim against Intact in first priority if she was Mr. Schram's spouse, as defined by the Insurance Act, R.S.O. 1990, c. I.8, as amended. The parties could not agree on this issue and submitted it to the Arbitrator for determination. The Arbitrator found that Ms. Amsinga and Mr. Schram were spouses for the purposes of the Insurance Act. Intact brings this application for an appeal of the Arbitrator's decision to this court.

[6] For the reasons that follow, the application is granted.

Facts

[7] There is very little in the factual record that is in dispute between the parties. However, in order to understand the reasons for my decision, some factual background is necessary. [page784]

(a) The relationship between Ms. Amsinga and Mr. Schram

[8] Ms. Amsinga was married to Jason Munro. They got married on April 10, 2005. They separated in June 2009, but were not divorced until April 26, 2015.

[9] Ms. Amsinga and Mr. Schram started a relationship in approximately 2009. Initially, they agreed that the relationship was one of boyfriend and girlfriend. The longer they were together, the more committed the relationship became.

[10] At the time of the accident, Ms. Amsinga had been living at a home in Parkhill with her then 15-year-old son. She had lived there for four years. Mr. Schram had been residing at a home in Ailsa Craig with his adult son. He had lived there for seven years.

[11] At the time of the accident, the following additional facts were not really disputed:

(a) Ms. Amsinga and Mr. Schram kept separate bank accounts, and generally managed their own bills at their residences. (b) Ms. Amsinga was not employed and had been on Ontario Disability Support Plan ("ODSP") benefits since 1991. (c) Given that Ms. Amsinga was not employed, Mr. Schram had more available funds and would provide some financial and non-financial support to Ms. Amsinga. (d) The non-financial support included such things as cutting the grass and other maintenance around Ms. Amsinga's house. The financial support included paying for maintenance on Ms. Amsinga's car and providing her with money for food, utilities and clothes if she was short. (e) Financially, it was cheaper for Ms. Amsinga and Mr. Schram to maintain separate residences. (f) The parties had been in a conjugal relationship. In addition, in the three years prior to the accident, they spent most nights at each other's homes both during the week and at the weekend. (g) Mr. Schram was involved in assisting Ms. Amsinga with raising her son and, on the testimony of Ms. Amsinga, Mr. Schram played a significant role in raising her son.

[12] In addition, the parties clearly held themselves out as being in a committed relationship. They had planned a commitment ceremony for August 17, 2013. This was intended to be a marriage ceremony. However, Mr. Munro was not prepared [page785] to pay for half of the divorce from Ms. Amsinga. As a result, Ms. Amsinga was not divorced from Mr. Munro as of August 17, 2013.

[13] The parties still proceeded with the commitment ceremony on August 17, 2013. However, the Arbitrator found that this was not a marriage ceremony, and the parties had not entered into a marriage that was voidable or void within the meaning of the definition of spouse set out at para. 25, below. This finding is not challenged by any of the parties on appeal.

[14] From this commitment ceremony, it is clear that the parties held themselves out as being a couple. They also confirmed that they had been in an exclusive relationship since 2009.

[15] Ultimately, the parties did move into one house together and get married, but these events did not take place until after the accident.

(b) The accident and the claim for benefits

[16] Ms. Amsinga was a passenger on the back of Mr. Schram's motorcycle on June 1, 2014. An accident took place that day, and Ms. Amsinga was injured.

[17] Ms. Amsinga made a claim for benefits. In the original claim she made, she stated that she was single. She was also asked about Mr. Schram at the time that she made this claim, and advised that he was her friend, not her spouse. This inconsistency was resolved by the Arbitrator. I do not view this inconsistency as being particularly relevant to the appeal. I have concluded that, while the parties were in a committed relationship, they did not meet the definition of spouse even accepting all of the Arbitrator's factual findings.

[18] Ms. Amsinga made her claim as against Intact Insurance. However, she was also named as an insured on a policy that she had with Dominion. Further, Mr. Munro was named as an insured on a policy with Wawanesa.

(c) The arbitration

[19] On June 20, 2014, Intact put Dominion on notice that it viewed Dominion as being the priority insurer in this case. On June 1, 2015, Intact advised that it wished to proceed to arbitration with the priority dispute. On June 22, 2017, Intact put Wawanesa on notice that it also viewed Wawanesa as being the priority insurer in this case.

[20] The three insurance companies entered into an arbitration agreement on May 8, 2019. The Arbitration was to be conducted by Ms. Samworth in accordance with the Insurance Act and the Arbitration Act, 1991, S.O. 1991, c. 17. [page786]

[21] A hearing was held before Arbitrator Samworth in London, Ontario on May 24, 2019. At that hearing, the Arbitrator received documentary evidence and heard the testimony of Mr. Schram and Ms. Amsinga.

[22] The Arbitrator issued her decision on September 4, 2019 and found that Mr. Schram and Ms. Amsinga were spouses for the purposes of the Insurance Act. As a result, the Arbitrator found that Intact was obliged to pay Ms. Amsinga's claim. Intact now appeals to this court.

The Relevant Statutory Provisions

[23] Section 286(2)1. of the Insurance Act sets out the following hierarchy for the order of priority in which an insured who is an occupant of an automobile can claim against an insurance company:

1. In respect of an occupant of an automobile, i. the occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured, ii. if recovery is unavailable under subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant, iii. if recovery is unavailable under subparagraph i or ii, the occupant has recourse against the insurer of any other automobile involved in the incident from which the entitlement to statutory accident benefits arose, iv. if recovery is unavailable under subparagraph i, ii or iii, the occupant has recourse against the Motor Vehicle Accident Claims Fund.

[24] For the purposes of s. 286(2)1.i., an insured is defined in s. 3(1) of the Statutory Accident Benefits Schedule, O. Reg. 34/10 as follows:

"insured person" means, in respect of a particular motor vehicle liability policy (a) the named insured, any person specified in the policy as a driver of the insured automobile and, if the named insured is an individual, the spouse of the named insured and a dependant of the named insured or of his or her spouse . . .

[25] Section 224(1) of the Insurance Act defines spouse as either of two persons who:

(a) are married to each other, (b) have together entered into a marriage that is voidable or void, in good faith on the part of the person asserting a right under this Act, or (c) have lived together in a conjugal relationship outside marriage, (i) continuously for a period of not less than three years, or [page787] (ii) in a relationship of some permanence, if they are the parents of a child;

[26] When these definitions are considered together, it is clear that Dominion (Ms. Amsiga's insurer) and Wawanesa (Mr. Munro's insurer) both fall within the first level of priority. The question is whether Intact also falls within this first level of priority. The answer to this question turns on the meaning of spouse. The Arbitrator found that Intact also fell into the first level of priority because she found that Ms. Amsinga and Mr. Schram met the definition of spouse.

[27] I should also note the definitions of spouse under the Family Law Act, R.S.O. 1990, c. F.3, as amended. The definition of spouse for support purposes under the Family Law Act is very similar, but not exactly the same, as the definition of spouse as set out above. The definition of spouse for the purposes of the property provisions of the Family Law Act does not include common-law spouses.

The Issues in Dispute

[28] Based on the foregoing, there are two questions that must be answered in this case:

(a) What is the standard of review to be applied in this case? (b) Did the arbitrator err in her decision?

[29] I will deal with each issue in turn.

Issue #1 -- The standard of review

[30] Counsel for Intact argues that the Arbitrator's decision should be reviewed on a standard of correctness. Wawanesa and Dominion argue that the Arbitrator's decision should be reviewed on a standard of reasonableness. To answer this question, I will first set out the original standard of review in these types of cases. I will then explain why I am of the view that the Supreme Court's decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 changes the analytical framework to be applied in this case. Finally, I will set out my views on how the Vavilov framework applies to this case.

(a) The original standard of review

[31] Originally, the standard of review for cases of this nature was reasonableness. Intact Insurance Co. v. Allstate Insurance Co. (2016), 131 O.R. (3d) 625, 2016 ONCA 609. [page788] In that decision, LaForme J.A. provides a detailed discussion of the standard of review, and concluded (at para. 51):

Finally, the nature of the question under review also suggests that a reasonableness standard of review applies. The nature of the question has rebutted the presumption of reasonableness review in two kinds of cases. The first is where the decision maker at issue and the courts share jurisdiction over the same legal question at the first instance: McLean, at para. 24. The second is where the question is one of those "exceptional" kinds of questions -- questions of jurisdiction, constitutional questions, or general questions of law that are both of central importance to the legal system as a whole and outside the adjudicator's specialized area of expertise -- where courts will apply a correctness standard of review: McLean, at paras. 25-26.

[32] The meaning to be given to the word spouse has previously been addressed by this court. See Royal & Sun Alliance Insurance Co. of Canada v. Desjardins Insurance Group, 2018 ONSC 4284. In that decision, Morgan J. accepted that an arbitrator's interpretation of the meaning of the word spouse was subject to a reasonableness standard of review.

[33] Counsel for Intact points to the decision of Leitch J. in ING Insurance Co. of Canada v. Co-Operators Insurance Co., 2013 ONSC 4885 as an example of this court applying a correctness standard to the type of question before me. Although Ing was decided before the Court of Appeal's decision in Intact, I will return to this decision below.

(b) The changes mandated by Vavilov

[34] The decision in Vavilov set out a new approach to judicial review and oversight. In that decision, the court stated (at paras. 23 and 24):

Where a court reviews the merits of an administrative decision ( i.e., judicial review of an administrative decisions other than a review related to a breach of natural justice and/or the duty of procedural fairness), the standard of review it applies must reflect the legislature's intent with respect to the role of the reviewing court, except where giving effect to that intent is precluded by the rule of law. The starting point for the analysis is a presumption that the legislature intended the standard of review to be reasonableness.

Parliament and the provincial legislatures are constitutionally empowered to create administrative bodies and to endow them with broad statutory powers: Dunsmuir, at para. 27. Where a legislature has created an administrative decision maker for the specific purpose of administering a statutory scheme, it must be presumed that the legislature also intended that decision maker to be able to fulfill its mandate and interpret the law as applicable to all issues that come before it. Where a legislature has not explicitly prescribed that a court is to have a role in reviewing the decisions of that decision maker, it can safely be assumed that the legislature intended the administrative decision maker to function with a minimum of [page789] judicial interference. However, because judicial review is protected by s. 96 of the Constitution Act, 1867, legislatures cannot shield administrative decision making from curial scrutiny entirely: Dunsmuir, at para. 31; Crevier v. Attorney General of Quebec, 1981 SCC 30, at pp. 236-37; U.E.S., Local 298 v. Bibeault, 1988 SCC 30, at p. 1090. Nevertheless, respect for these institutional design choices made by the legislature requires a reviewing court to adopt a posture of restraint on review.

[35] The court went on to list two ways in which a legislature can indicate that a standard other than reasonableness will apply, as follows:

(a) the statute may explicitly prescribe a different standard; or (b) the legislature may provide for a statutory appeal mechanism.

[36] The legislature has specifically required insurers to resolve priority disputes through arbitration. See Disputes Between Insurers, O. Reg. 283/95, s. 7(1). Those arbitrations are to be initiated under the Arbitration Act, 1991. Neither the Regulation nor the Insurance Act contain any mechanism to appeal these decisions.

[37] However, these arbitrations are conducted pursuant to the Arbitration Act. Therefore, any appeal of the arbitration flows from s. 45 of the Arbitration Act. Subsections (1) to (3) of that provision state:

45(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that, (a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and (b) determination of the question of law at issue will significantly affect the rights of the parties.

Idem

(2) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law.

Appeal on question of fact or mixed fact and law

(3) If the arbitration agreement so provides, a party may appeal an award to the court on a question of fact or on a question of mixed fact and law.

[38] The arbitration agreement in this case permitted any party to the arbitration to appeal a point of fact, law or mixed point of fact and law to a judge of this court without leave.

[39] As a result, counsel for the Applicant argues that the standard of review that should be applied in this case is a correctness standard. I agree with counsel for the Applicant that this is a statutory appeal. This appeal comes to our court by way of [page790] an application, but without leave. It is, in other words, an appeal as of right.

[40] A key part of the Supreme Court's direction in Vavilov was that the courts should be giving deference to legislative choices and that the framework for judicial review is based, at least in part, on legislative choices. As the court explained (at paras. 46 and 47):

Finally, and most crucially, the appeals now before the Court have allowed for a comprehensive and considered examination of the standard of review analysis with the goal of remedying the conceptual and practical difficulties that have made this area of the law challenging for litigants and courts alike. To achieve this goal, the revised framework must, for at least two reasons, give effect to statutory appeal mechanisms. The first reason is conceptual. In the past, this Court has looked past an appeal clause primarily when the decision maker possessed greater relative expertise -- what it called the "specialization of duties" principle in Pezim, at p. 591. But, as discussed above, the presumption of reasonableness review is no longer premised upon notions of relative expertise. Instead, it is now based on respect for the legislature's institutional design choice, according to which the authority to make a decision is vested in an administrative decision maker rather than in a court. It would be inconsistent with this conceptual basis for the presumption of reasonableness review to disregard clear indications that the legislature has intentionally chosen a more involved role for the courts. Just as recognizing a presumption of reasonableness review on all questions respects a legislature's choice to leave some matters first and foremost to an administrative decision maker, departing from that blanket presumption in the context of a statutory appeal respects the legislature's choice of a more involved role for the courts in supervising administrative decision making.

The second reason is that, building on developments in the case law over the past several years, this decision conclusively closes the door on the application of a contextual analysis to determine the applicable standard, and in doing so streamlines and simplifies the standard of review framework. With the elimination of the contextual approach to selecting the standard of review, the need for statutory rights of appeal to play a role becomes clearer. Eliminating the contextual approach means that statutory rights of appeal must now either play no role in administrative law or be accepted as directing a departure from the default position of reasonableness review. The latter must prevail.

[41] In this case, the Arbitration Act provides for the parties to permit an appeal either with, or without, leave. In this case, the parties have used the statutory framework to agree that a party challenging the Arbitrator's decision is entitled to do so by way of an appeal without leave. If I am to give effect to the Supreme Court's directives in Vavilov, then I must apply the appellate standards of review to this case.

[42] Counsel for Wawanesa directs my attention to the decision in Unifund Assurance Co. v. Dominion of Canada General Insurance Co., 2018 ONCA 303. In that decision, [page791] van Rensburg J.A. stated [at para. 3] that "[t]ypically, the decisions of SABS arbitrators respecting priority disputes are subject to review for reasonableness on appeal . . .". I acknowledge that this was clearly the state of the law in Ontario prior to Vavilov, as I have set out in the first part of this analysis. See also Dominion of Canada General Insurance Co. v. State Farm Mutual Automobile Insurance Co., 2018 ONCA 101.

[43] However, Vavilov makes it clear that there has been a substantial shift in the approach to judicial review. Again, based on my review of the relevant case-law and for the reasons set out above, I conclude that I am bound to apply the appellate standards to a review of the Arbitrator's decision.

(c) Applying the standard in this case

[44] This brings me to the appellate standard of review. It is well-known and is set out in Housen v. Nikolaisen, 2002 SCC 33. In that decision, the Supreme Court determined that the standard of review on a question of law was correctness. For purely factual errors, the reviewing court must find a "palpable and overriding" error. For questions of mixed fact and law, the court must consider whether there is an extricable error of law. If there is an extricable error of law, or a pure error of law in the application of the law to findings of fact, then the standard is correctness. If, on the other hand, the error is part of the findings of fact, then a "palpable and overriding" error is necessary for the decision to be reversed.

[45] Determining when to apply a correctness standard to an issue that has elements of both fact and law in it is difficult. It requires the court to consider whether the error is an error of law. However, the Supreme Court's decision in Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., [1997] 1 S.C.R. 748, 1997 SCC 385 where the court stated (at paras. 35, 37 and 39):

Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests. A simple example will illustrate these concepts. In the law of tort, the question what "negligence" means is a question of law. The question whether the defendant did this or that is a question of fact. And, once it has been decided that the applicable standard is one of negligence, the question whether the defendant satisfied the appropriate standard of care is a question of mixed law and fact. I recognize, however, that the distinction between law on the one hand and mixed law and fact on the other is difficult. On occasion, what appears to be mixed law and fact turns out to be law, or vice versa. [page792]

By contrast, the matrices of facts at issue in some cases are so particular, indeed so unique, that decisions about whether they satisfy legal tests do not have any great precedential value. If a court were to decide that driving at a certain speed on a certain road under certain conditions was negligent, its decision would not have any great value as a precedent. In short, as the level of generality of the challenged proposition approaches utter particularity, the matter approaches pure application, and hence draws nigh to being an unqualified question of mixed law and fact. See R. P. Kerans, Standards of Review Employed by Appellate Courts (1994), at pp. 103-108. Of course, it is not easy to say precisely where the line should be drawn; though in most cases it should be sufficiently clear whether the dispute is over a general proposition that might qualify as a principle of law or over a very particular set of circumstances that is not apt to be of much interest to judges and lawyers in the future.

However, the respondent says that, having informed itself correctly on the law, the Tribunal proceeded nevertheless to ignore certain kinds of indirect evidence. Because the Tribunal must be judged according to what it does and not according to what it says, the import of the respondent's submission is that the Tribunal erred in law. After all, if a decision-maker says that the correct test requires him or her to consider A, B, C, and D, but in fact the decision-maker considers only A, B, and C, then the outcome is as if he or she had applied a law that required consideration of only A, B, and C. If the correct test requires him or her to consider D as well, then the decision-maker has in effect applied the wrong law, and so has made an error of law.

[46] The issue, therefore, is whether there is an extricable error of law in this case. In ING, Leitch J. noted that the interpretation of the word spouse is a clear question of statutory interpretation. Therefore, in Leitch J.'s view it is a question of law that should be scrutinized on a correctness standard. Counsel for the Applicant urges me to adopt this view.

[47] In support of that position, counsel for the Applicant also directs my attention to Travelers Insurance Co. v. CAA Insurance Co. (2020), 151 O.R. (3d) 78, 2020 ONCA 382. In that decision, the Court of Appeal addressed a case where a driver was catastrophically injured in an accident in Nunavut while driving a Government of Nunavut vehicle with a Nunavut insurance policy. The parties agreed that, because the driver had a valid Ontario insurance policy, she was entitled to claim benefits from Ontario. The question was which insurer should be obligated to pay the benefits: the insurer who had provided the driver's Ontario insurance policy (CAA), or the insurer who insured the vehicle in Nunavut (Travelers).

[48] The Arbitrator considered the connections between Travelers and the Province of Ontario and determined that there was a sufficient connection between Travelers and the province of Ontario such that Travelers should be obligated to pay the costs [page793] of the claim based on the Ontario accident benefits schedule. This decision was overturned by the Court of Appeal. Justice Lauwers noted, at para. 14 "[b]ecause this is a statutory appeal that raises questions of law, including questions of statutory interpretation, the standard of correctness applies . . .". Justice Lauwers went on to find that, in any event, the Arbitrator had made several serious errors that amounted to "constitutional, jurisdictional and exceptional" errors. Therefore, the standard of review the Court of Appeal applied in that case was correctness.

[49] However, in Intact (decided after ING but before Vavilov or Travelers), the Court of Appeal considered whether an interpretation such as the one adopted by the Arbitrator in this case was a question of mixed fact and law. The Court of Appeal's analysis in Intact, along with a description of how it would apply to the interpretation of spouse, is set out in the reasons of Morgan J. from Royal & Sun Alliance as follows (paras. 5 and 6):

Counsel for the Respondent relies on Intact Insurance Co. v Allstate Insurance Co., 2016 ONCA 609, in arguing that the present case raises a mixed question of fact and law and that a correctness standard should not be applied to the Arbitrator's decision. He notes that in Intact, at para 35, the Court of Appeal indicated that "determining whether a person is 'principally dependent' on another is a question of mixed fact and law. . . And this court has already confirmed that, on appeals from insurance arbitrations involving an interpretation of dependency under SABS, mixed fact and law questions are reviewed for reasonableness."

Here, the dates and duration of Ms. Halliday's and Mr. Zorony's residences, both separately and together, were not in dispute. What was in dispute before the Arbitrator -- the sole issue that the Arbitrator had to decide -- was the definition of the word "spouse" to be applied to section 224(1) of the Insurance Act. While this can potentially be characterized as a purely legal question, as counsel for the Appellant urges, it inevitably has factual components built into it. One cannot determine what the words "lived together" or "conjugal relationship" mean without taking the factual context into account. The exercise here is similar to that which the Court of Appeal faced in Ing in defining and applying the phrase "principally dependent". I am willing to consider this a question of mixed fact and law, such that a reasonableness standard of review applies.

[50] When all of these decisions are considered, it is clear that there are conflicting authorities on this issue. This is not surprising, given the difficulties identified in Housen and Southam in determining what standard to apply to a question of mixed fact and law and given the changes to the standard of review that have been made by Vavilov.

[51] As will be seen, I am of the view that the definition of spouse is an extricable question of law, as outlined in Southam. In this case, the question is whether at law the definition of spouse under the Insurance Act is broad enough to capture relationships, even [page794] committed and exclusive relationships, between unmarried people who have separate residences. This is a much larger question of more general application. On this appeal, the factual matrix is less important than whether the Arbitrator has used the correct legal definition of spouse.

Issue #2 -- Did the Arbitrator err?

[52] The starting point for my analysis is the Arbitrator's determination of the meaning of "spouse". As I have noted, this is a question of mixed fact and law, but I am of the view that the Arbitrator made errors in her analysis of the governing legal principles. As a result, I am of the view that the Arbitrator's decision is incorrect and must be overturned.

[53] The Arbitrator based her conclusions on three points that should be addressed:

(a) A finding that the Supreme Court of Canada's reasoning in Miron v. Trudel, [1995] 2 S.C.R. 418, 1995 SCC 97 applies in this case as well. More generally, a finding that family law principles apply to the interpretation of the definition of spouse under the Insurance Act. (b) A finding that the decision in Royal & Sun Alliance was distinguishable from the facts of this case. (c) A finding that, in spite of the fact that Mr. Schram and Ms. Amsinga had separate residences, they were living together.

[54] There are errors in all three findings. I will deal with each in turn.

(a) The Arbitrator's finding on Miron

[55] Miron was a decision in which Mr. Miron challenged the validity of provisions of the Insurance Act that precluded unmarried common-law partners from being defined as spouses, at least for the purposes of obtaining accident and loss of income benefits. Justice McLachlin (as she then was) found that the definition of spouse in the accident benefits provisions of the Insurance Act, as it was then written, did not include common-law spouses.

[56] Justice McLachlin went on to find that this omission was a violation of s. 15 of the Canadian Charter of Rights and Freedoms and that the violation was not saved under s. 1. Justice McLachlin reasoned that the failure of the legislature to provide the same coverage to married spouses and to common-law spouses was a violation of the equality provisions of the Charter. [page795]

[57] In her reasons, the Arbitrator relies on the following passage from Miron [at para. 109]:

When characterizing the objective of the Standard Automobile Policy for the purposes of s. 1 analysis, it is important to adopt a functional and pragmatic approach which frames that purpose neither too broadly nor too narrowly. The objective of the Standard Automobile Policy, which I accept as pressing and substantial, is to protect stable family units by insuring against the economic consequences that may follow from the injury of one of the members of the family. Although I might agree that an incidental effect of this legislation, as a result of the impugned distinction, may be to encourage marriage, I cannot agree that, by reason of this distinction alone, we should conclude that the promotion of marriage is, itself, the fundamental purpose of the legislation. I cannot see people seriously considering the availability of joint automobile insurance as a factor in their decision of whether or not to marry. As such, taken as a whole, although the legislation is most certainly "pro-family", I do not believe that it would be proper to characterize it as "pro-marriage".

[Emphasis added]

[58] This passage is taken from the concurring judgment of L'Heureux-Dubé J. The bolded portions of the passage were not included in the Arbitrator's reasons. I have included them here because I am of the view that they provide additional relevant context for this passage. Justice L'Heureux-Dubé was addressing the purposes of the benefits schedule as it applied to the s. 1 analysis.

[59] In reviewing the entirety of this passage, together with the reasons of McLachlin J., I am not persuaded that Miron stands for the proposition that the definition of spouse in the Insurance Act must be interpreted in the same way as the definition of spouse in the various family law statutes. In my view, Morin resolved a question of whether specific groups should be eligible for benefits. It did not address the question of how those groups should be defined for particular types of benefits.

[60] I am fortified in that conclusion both by the reasons of Morgan J. in Royal & Sun Alliance and by a decision of the Ontario Court of Appeal that was decided after Miron. I start with the decision from the Court of Appeal.

[61] In Economical Mutual Insurance Co. v. Lott (1998), 37 O.R. (3d) 417, Morden A.C.J.O. stated [at para. 17]:

In so far as the motions judge, in arriving at his interpretation of "spouse", considered the policy of the no-fault provisions to be the same as that of the support sections in the Family Law Reform Act, 1978, I must also disagree. In this regard, I agree with the reasons of D.S. Ferguson J. in Catherwood v. Young Estate (1995), 27 O.R. (3d) 63, supra, at p. 77:

[T]he No-Fault Benefit Schedule is not part of a coherent package of family law legislation. It provides automatic benefits to spouses regardless [page796] of need unlike the Family Law Act which provides a scheme for court-ordered support where need is established.

[62] The Catherwood v. Young Estate decision cited by Morden A.C.J.O. sets out a detailed discussion of the differences between the family law definition of spouse and the Insurance Act definition of spouse. As a result of reviewing these decisions, it is clear that both the Superior Court and the Court of Appeal have determined that different policy considerations underlie each scheme and that a different reading of the definition is appropriate.

[63] I also note that the Arbitrator pointed out that the fact that the statutory benefits scheme is consumer protection legislation that should be given a broad and liberal interpretation. See Smith v. Co-operators General Insurance Co., 2000 ONCA 4138. However, Smith did not deal with the interpretation of the definition of spouse. Justice Sharpe (writing for the majority) also observed that the insurance scheme needs to be read as a whole. In my view, that reading (even done in a broad and liberal manner) must be done with the differences between the Insurance Act system and the family law system in mind.

[64] Further, the fact that there is a difference between the meaning of the word spouse under the Insurance Act and under principles of family law should not be surprising. Under family law principles, it would be unlikely that a person would have more than one spouse. However, under the interpretation adopted by the Arbitrator, Ms. Amsinga has two spouses. All of the insurance companies agree that Mr. Munro is her spouse for the purposes of this proceeding. Accepting the Arbitrator's position leaves Ms. Amsinga in the position of having two spouses for the purposes of this legislation. If the legislature had intended that outcome, the language would have clearly spelled that fact out.

[65] In addition, it must be remembered that the Family Law Act defines spouses differently for property issues and support issues. The fact that the family law system itself contains different definitions internally for different parts of the regime also suggests that the definitions of spouse need to be interpreted in light of the differences between spousal support and the Insurance Act benefits.

[66] Finally, I also note that Morgan J.'s decision in Royal & Sun Alliance sets out a detailed analysis of why the decision of a previous arbitrator incorporating family law principles into the Insurance Act regime was unreasonable. I agree with that [page797] analysis. This brings me to the second issue with the Arbitrator's decision in this case.

(b) Was the decision in Royal & Sun Alliance distinguishable?

[67] There is no question that, if the decision in Royal & Sun Alliance was not distinguishable, then the Arbitrator was bound to apply it and find that Ms. Amsinga and Mr. Schram were not spouses for the purposes of the Insurance Act. For the reasons that follow, I am of the view that the decision was not distinguishable and the Arbitrator was bound to follow it.

[68] The reasons that the Arbitrator found that the decision in Royal & Sun Alliance was distinguishable are set out in her reasons as follows:

On the issue of "living together" I find that I am not bound by the decision of Justice Morgan. There are other decisions of other Superior Court Judges and as well from the Court of Appeal that in my view suggests that a different path can be followed in interpreting "living together" rather than the literal interpretation and further that the facts of this case are in any event distinguishable.

[69] I start with the Arbitrator's assertion that there were other Court of Appeal decisions and Superior Court decisions that suggested that a different path could be followed. In support of this assertion, the Arbitrator makes several references to Miron. I have already set out my conclusions on Miron above and apply the same analysis here.

[70] The Arbitrator also makes references to case law from both the family law and Insurance Act contexts that interprets the phrase "conjugal relationship". Those cases are of limited assistance as they focus on the second part of the definition of spouse. In this case, the decision turns on whether the parties were "living together".

[71] The Arbitrator also references a number of other arbitration decisions that adopt the same interpretation of "living together" for determining whether parties are spouses as the Arbitrator does. These decisions were arrived at by using the same principles from family law. These decisions should not have been relied upon. The fact that arbitrators decided to adopt a different approach from Morgan J. does not mean that Morgan J.'s decision is either distinguishable or not binding on the arbitrators who considered the issue after Morgan J.'s decision was released. In this context, Morgan J.'s decision is appellate authority that is binding on arbitrators, especially after the changes in Vavilov. [page798]

[72] This brings me to the other Superior Court decision, the reasons of Leitch J. in ING. The Arbitrator points to the following passage as supporting the proposition that the definition of spouse should be interpreted in accordance with family law principles [at para. 51]:

While I note that Molodowich makes clear that the fact that one party continues to maintain a separate residence does not preclude a finding that parties are living together in a conjugal relationship, it is difficult to accept that Jason and Amy "lived together" for the purpose of the spousal definition under the Act for the three-year period leading up to the accident.

[73] I do not see this passage as supporting a different interpretation than was arrived at by Morgan J. for the following reasons:

(a) The decision in ING does not consider the different statutory regimes. In particular, there is no discussion of the principles in Economical Mutual as set out at para. 60 above. (b) The conclusion expressed by Leitch J. is expressed in obiter, and there is no indication that the issues raised in Royal & Sun Alliance were raised in front of her. (c) The conclusion expressed by Leitch J. must be considered in its entirety. In particular, at para. 50, Leitch J. sets out relevant observations about the interpretation of "liv[ing] together . . . continuously" that suggest a narrower interpretation of the definition of spouse would be appropriate.

[74] For the foregoing reasons, there was no alternative path available in the case law to interpret the meaning of spouse in this case. The interpretation from Royal & Sun Alliance governed the decision of the Arbitrator.

[75] This brings me to the second distinction, which is the question of whether Royal & Sun Alliance could be distinguished from the facts of this case. I draw the following principles (among others) out of the Royal & Sun Alliance decision:

(a) The interpretation of spouse under the Insurance Act is different than the interpretation of spouse under the family law statutes. (b) The interpretation of live together in a conjugal relationship needs to be interpreted with regard to the clear meaning of the two phrases. All of the words need to be given meaning. Lived together means living in the same residence.

[76] The Arbitrator found that Royal & Sun Alliance could be distinguished on the basis that the underlying facts were different. Specifically, the Arbitrator found that Ms. Amsinga and [page799] Mr. Schram spent more time together, and had done so for longer, than the couple involved in the Royal & Sun Alliance decision.

[77] This is not a basis for distinguishing the Royal & Sun Alliance decision, which sets out legal principles of more general application. In this case, it is a bright line test that requires parties to have lived together in the same residence for the requisite three years before they can be considered spouses. This overarching legal principle cannot be distinguished merely because there are two different sets of facts that it is being applied to.

[78] In my view, the Arbitrator was bound to follow the principles set out in Royal & Sun Alliance. The decision was not distinguishable on the facts before the Arbitrator. It is binding appellate authority. As a result, the Arbitrator's decision was wrong in law and must be reversed.

(c) The Arbitrator's finding on living together

[79] The concerns I have expressed in the previous two sections are, in my view, sufficient to dispose of this appeal. However, I should also address the statutory interpretation issues. The Arbitrator was called upon to interpret the phrase "lived together in a conjugal relationship". There are two separate parts to the phrase.

[80] The first part, lived together, has a plain and ordinary meaning. It means "occupy the same premises". In this case, the arbitrator declined to apply the plain and ordinary meaning of the phrase.

[81] Instead of acknowledging the existence of different principles in family law and under the Insurance Act, the Arbitrator adopted the principles from family law. She did so without a clear explanation as to why these principles should apply to an insurance law case.

[82] As Morgan J. noted in Royal & Sun Alliance (at para. 27):

Unlike the Family Law Act, the Insurance Act provides automatic benefits to spouses regardless of need. It therefore requires a context-specific approach of its own. More specifically, the insurance context contains no imperative to deviate from the ordinary understanding of what it means for two persons to "live together". In the family law sense of the term, where dependency is crucial to the spousal support context, persons can "live together" -- i.e. live interdependent lives -- but maintain separate physical residences. In most non-family law contexts, and particularly in the insurance law context of automatic benefits without a broad sociological foundation on which to base those benefits, people who "live together" can be considered spouses, but only if they do so in the normal sense of those words and for the requisite period of time.

[83] I adopt the same reasoning in this case. As I noted in the previous section, I am also of the view that the Arbitrator was bound to adopt the same reasoning. [page800]

(d) Concluding comments

[84] For the foregoing reasons, I am of the view that the Arbitrator's decision is incorrect and must be overturned and I so order.

[85] As a final matter, given the fact that the Vavilov standard is new, it is also appropriate, in the alternative, to consider the Arbitrator's decision on the basis of the standard of reasonableness that Morgan J. accepted in Royal & Sun Alliance. As set out at para. 78, Morgan J.'s decision is not distinguishable from the facts of this case.

[86] From that observation, it follows that even if I was bound to apply a reasonableness standard (or, more appropriately given Vavilov, the standard applicable to questions of mixed fact and law) instead of the correctness standard that I have applied for an error of law, the reasoning of Morgan J. would still apply to the Arbitrator's conclusions in this case. In other words, not only is the Arbitrator's decision incorrect, it is unreasonable for the reasons I have set out above and the reasons provided by Morgan J. in Royal & Sun Alliance.

Conclusion

[87] For the foregoing reasons, Intact's application is granted.

[88] I confirm that the parties have agreed on costs. As Intact was successful in its appeal, it shall be entitled to its costs in the sum of $7,500 inclusive of HST and disbursements. These costs are payable equally by each of the respondents.

Appeal allowed.