Berg, a minor by her Litigation Guardian, Eleanor S. Berg v. Farm Bureau Mutual Insurance Company

Berg, a minor by her Litigation Guardian, Eleanor S. Berg v. Farm Bureau Mutual Insurance Company [Indexed as: Berg (Litigation guardian of) v. Farm Bureau Mutual Insurance Co.]

50 O.R. (3d) 109

[2000] O.J. No. 2691

Docket No. C32747

Court of Appeal for Ontario

Labrosse, Weiler and Sharpe JJ.A.

July 21, 2000

Insurance -- Automobile insurance -- Voluntary reciprocal scheme for enforcement of motor vehicle liability insurance policies across Canada requiring participating American insurer to appear and defend action in province in which it is sued.

The appellant, a resident of Minnesota who was covered by an insurance policy issued by the respondent, a Minnesota corporation, was a passenger in an automobile licensed in Minnesota that was involved in an accident in Ontario with an automobile owned and driven by an Ontario resident. In an action instituted in Ontario, the appellant claimed entitlement to statutory accident benefits from the respondent. The respondent moved successfully to stay the proceedings. The appellant appealed.

Held, the appeal should be allowed.

The motions judge erred in failing to give effect to the power of attorney and undertaking ("PAU") that had been signed by the respondent and filed in British Columbia in 1964. A plain reading of the PAU indicated that the respondent agreed to accept service and to appear in any action against it in any province or territory in which the action had been instituted, in this case, Ontario. The effect of the PAU was that the respondent had agreed to the assumption of jurisdiction over it when sued in a province of Canada. In designating the Registrar of Motor Vehicles as its agent to accept service on its behalf, the respondent had also excluded the necessity for service outside the jurisdiction.

Although an Ontario court maintains a discretion with respect to jurisdiction, an agreement respecting jurisdiction will generally be observed in the absence of a good reason for not doing so. Here, the parties were both resident in Minnesota and the evidence on any issues of fact was situated or more readily available there. This could be a reason for not enforcing the PAU. The factors connecting the parties to Minnesota were important ones to consider in deciding the most appropriate forum for the resolution of a claim. The rationale underlying consideration of connecting factors and, in particular, the factor of juridical advantage is, however, to give effect to the reasonable expectation of the parties respecting the outcome in the event of litigation. Here, the undertaking signed by the respondent was indicative of its reasonable expectation.

If the appellant's action was allowed to proceed in Ontario, the PAU made Ontario law applicable and the appellant would be entitled to statutory accident benefits. The PAU precluded the respondent from asserting the defence that its policy did not include statutory accident benefits coverage. If, on the other hand, a stay was granted and the appellant was forced to sue in Minnesota, the issue of whether the respondent was obliged to pay statutory accident benefits was very much a live issue. The PAU provided that the law to be applied was that of the province where "the action or proceeding may be initiated". It could be argued that, because of the stay, the action may not be initiated in Ontario. There could, accordingly, be a significant loss of juridical advantage to the appellant.

APPEAL from a judgment of J.R. Jennings J. granting a stay of proceedings.

Cases referred to Amchem Products Inc. v. British Columbia (Workers' Compensation Board), [1993] 1 S.C.R. 897, 77 B.C.L.R. (2d) 62, 102 D.L.R. (4th) 96, 150 N.R. 321, [1993] 3 W.W.R. 441, 14 C.P.C. (3d) 1; Eastern Power Ltd. v. Azienda Comunale Energia & Ambiente (1999), 1999 3785 (ON CA), 178 D.L.R. (4th) 409, 50 B.L.R. (2d) 33, 39 C.P.C. (4th) 160 (Ont. C.A.); Healy v. Interboro Mutual Indemnity Insurance Co. (1999), 1999 1485 (ON CA), 44 O.R. (3d) 404, [1999] I.L.R. 1-3704, 44 M.V.R. (3d) 167, [1999] O.J. No. 1667 (C.A.) Statutes referred to Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21 Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 17.06 Authorities referred to Sharpe, Interprovincial Product Liability Litigation (Toronto: Butterworths, 1982), pp. 25-28

Nandani Diaram, for appellants. Brian J.E. Brock, Q.C., for respondent.

The judgment of the court was delivered by

[1] WEILER J.A.: -- The issue on this appeal is a narrow one. The issue is whether the voluntary reciprocal scheme for the enforcement of motor vehicle liability insurance policies across Canada requires a participating American insurer to appear and defend the action in the province in which it is sued.

[2] The appellant, Ms. Berg, is a resident of Minnesota and was a passenger in an automobile licensed in Minnesota that was involved in an accident in Ontario with an automobile owned and driven by an Ontario resident. The appellant was covered by an insurance policy issued by the respondent, Farm Bureau Mutual Insurance Company, a Minnesota corporation. It is not disputed that the benefits to which the appellant is entitled pursuant to the contract of insurance have been paid.

[3] By way of an action instituted in Ontario, the appellant claimed entitlement to the statutory accident benefits ("SABs") from the respondent at the minimum limits required in the Province of Ontario pursuant to the Ontario Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21. The respondent moved to stay the proceedings.

[4] On August 4, 1999, Jennings J. granted the motion for a stay. He held that the appropriate forum for the adjudication of the appellant's claim was Minnesota on the basis that that jurisdiction had the closest and most real connection with the contract. He added that no juridical advantage necessarily followed the choice of Minnesota as the convenient forum.

[5] The appellant appeals on the basis that Jennings J. erred in failing to give effect to the power of attorney and undertaking that had been signed by the respondent and filed in British Columbia in 1964. In the alternative, the appellant asserts that Jennings J. erred in holding that Minnesota was the appropriate forum for the adjudication of the claim for Ontario SABs.

[6] For the reasons that follow, I am of the opinion that the appeal should succeed.

[7] The relevant portion of the power of attorney and undertaking ("PAU") signed by the respondent reads as follows:

POWER OF ATTORNEY AND UNDERTAKING

FARM BUREAU MUTUAL INSURANCE COMPANY

(Name of company)

the head office of which is in the City of Des Moines

in the State__________of Iowa__________ (Province or State)

in the _United States, hereby, with respect to an action or (Country)

proceeding against it or its insured, or its insured and another or others, arising out of a motor-vehicle accident in any of the respective Provinces or Territories, appoints severally the . . . Registrars of Motor Vehicles of Ontario . . . to do and execute all or any of the following acts, deeds, and things, that is to say: To accept service of notice or process on its behalf.

FARM BUREAU MUTUAL INSURANCE COMPANY aforesaid hereby undertakes: --

A. To appear in any action or proceeding against it or its insured in any Province or Territory in which such action has been instituted and of which it has knowledge;

B. That upon receipt from any of the officials aforesaid of such notice or process in respect of its insured, or in respect of its insured and another or others, it will forthwith cause the notice or process to be personally served upon the insured;

C. Not to set up any defence to any claim, action, or proceeding, under a motor-vehicle liability insurance contract entered into by it, which might not be set up if the contract had been entered into in, and in accordance with the law relating to motor-vehicle liability insurance contracts of the Province or Territory of Canada in which such action, or proceeding may be instituted, and to satisfy any final judgment rendered against it or its insured by a Court in such Province or Territory, in the claim, action, or proceeding, up to

(1) the limit or limits of liability provided in the contract;

but

(2) in any event an amount not less than the limit or limits fixed as the minimum for which a contract of motor- vehicle liability insurance may be entered into in such Province or Territory of Canada, exclusive of interest and costs and subject to any priorities as to bodily injury or property damage with respect to such minimum limit or limits as may be fixed by the Province or Territory.

[8] A plain reading of the PAU indicates that the respondent insurer agreed to accept service and to appear in any action against it in any province or territory in which the action had been instituted, in this case, Ontario. The respondent submits that this undertaking applies to the situation where its insured is sued and that it does not apply to the situation where the insurance company is being sued by its own insured. That is not what the PAU says. Paragraph A of the PAU states that the respondent undertakes "To appear in any action or proceeding against it or its insured . . .". "It" refers to the Farm Bureau Mutual Insurance Company, the respondent. The respondent's submission must accordingly fail. The effect of the PAU is that the respondent has agreed to the assumption of jurisdiction over it when sued in a province of Canada. In designating the Registrar of Motor Vehicles as its agent to accept service on its behalf, the respondent has also excluded the necessity for service outside the jurisdiction.

[9] In this case, the appellant served the respondent outside of Ontario, giving rise to the motion for a stay pursuant to rule 17.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Pursuant to rule 17.06 (2)(c) and the jurisprudence relating to forum non conveniens, a court may set aside service of process outside Ontario where Ontario is not the appropriate forum for the hearing of the proceeding. Although an Ontario court maintains a discretion with respect to jurisdiction, an agreement respecting jurisdiction will generally be observed in the absence of a good reason for not doing so: see Interprovincial Product Liability Litigation, Robert J. Sharpe (Toronto: Butterworths, 1982), pp. 25-28 and cases cited therein.

[10] Here, the parties are both resident in Minnesota and the evidence on any issues of fact is situated or more readily available there. This could be a reason for not enforcing the PAU. The factors connecting the parties to Minnesota are important ones to consider in deciding the most appropriate forum for the resolution of a claim: Amchem Products Inc. v. British Columbia (Workers' Compensation Board), 1993 124 (SCC), [1993] 1 S.C.R. 897 at pp. 911-12, 102 D.L.R. (4th) 96 at p. 104; Eastern Power Ltd. v. Azienda Communale Energian & Ambiente (1999), 1999 3785 (ON CA), 178 D.L.R. (4th) 409 at pp. 414-15, 50 B.L.R. (2d) 33 (Ont. C.A.). The rationale underlying consideration of connecting factors and, in particular, the factor of juridical advantage is, however, to give effect to the reasonable expectation of the parties respecting the outcome in the event of litigation: Amchem, supra, at p. 920 S.C.R., pp. 110-11 D.L.R. Here, the undertaking signed by the respondent is indicative of its reasonable expectation.

[11] This court had occasion to consider the effect of the PAU in Healy v. Interboro Mutual Indemnity Insurance Co. (1999), 1999 1485 (ON CA), 44 O.R. (3d) 404, [1999] O.J. No. 1667 (C.A.). Although that decision did not deal with the question of jurisdiction, the purpose of the PAU was discussed and is of assistance here. At para. 14 [pp. 409-10 O.R.] of the decision, Goudge J.A., on behalf of the court, stated:

To paraphrase the description of Blair J.A. in Potts, supra [(1992), 1992 7623 (ON CA), 8 O.R. (3d) 556 (C.A.) at pp. 557-58)] a participating insurer agrees to be bound by the law concerning the compulsory automobile insurance coverage of the state or province where the action against it is brought rather than the automobile insurance coverage of the state or province where its policy is issued. In return a participating insurer can assure those persons whom it insures that they will be recognized as being validly insured when driving in other participating jurisdictions. It assures the same statutory guarantees to someone injured in an automobile accident in Ontario whether the relevant automobile insurance contract was made in Ontario or another participating jurisdiction.

[12] If the appellant's action is allowed to proceed in Ontario, the PAU makes Ontario law applicable and the appellant will be entitled to SABs. The PAU precludes the respondent from asserting the defence that its policy does not include SABs coverage: Healy, supra, at paras. 18 and 19 [pp. 409-10 O.R.]. If, on the other hand, a stay is granted and the appellant is forced to sue in Minnesota, the issue of whether the respondent is obliged to pay SABs is very much a live issue. The PAU provides that the law to be applied is that of the province where the "action or proceeding may be initiated". It could be argued that, because of the stay, the action may not be initiated in Ontario. There could, accordingly, be a significant loss of juridical advantage to the appellant.

[13] For these reasons, I am of the opinion that the learned motions judge erred in the exercise of his discretion to grant a stay because he did not consider the wording and effect of the PAU signed by the respondent. Accordingly, I would allow the appeal and set aside the stay of proceedings with costs to the appellant here and at first instance.

Appeal allowed.