Ortiz v. The Dominion of Canada General Insurance Company

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

52 O.R. (3d) 130

[2001] O.J. No. 27

Docket No. C34477

Court of Appeal for Ontario

Carthy, Charron and Sharpe JJ.A.

January 10, 2001

Insurance--Automobile insurance--Uninsured automobile coverage--Uninsured motorist coverage under s. 265(1) subject to territorial limits--Insured not entitled to coverage for injuries suffered in motor vehicle accident involving uninsured motorist in Guatemala--Insurance Act, R.S.O. 1990, c. I.8, s. 265(1)--Uninsured Automobile Coverage Regulation, R.R.O. 1990, Reg. 676, s. 10.

The plaintiff was insured under a standard automobile insurance contract issued by the defendant. He was seriously injured when his vehicle was struck by an uninsured motorist in Guatemala. His insurance policy, which was subject to the regulatory approval of the Superintendent, contained a territorial limit that limited coverage to an incident that occurs in Canada, the United States of America or on a vessel travelling between ports of those countries. The parties brought a motion pursuant to Rule 22 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for a determination as to whether the plaintiff was entitled to uninsured automobile coverage for the injuries he suffered in the accident. The motions judge held that the territorial limit was inconsistent with the terms of the Insurance Act and that it was not open to the Superintendent to approve a form of policy with the territorial limit. The defendant insurer appealed.

Held, the appeal should be allowed.

There was no ambiguity or conflict between the policy limitation and the terms of the legislation. It was clear from the language of s. 265(1) of the Insurance Act that coverage with respect to an uninsured automobile is subject to the exclusions and limits as prescribed by regulation. Section 10 of the Uninsured Automobile Coverage Regulation explicitly provided that the general exclusions of the motor vehicle liability policy govern the recovery of the benefits under s. 265(1). The territorial limit in the policy applied to preclude coverage.

APPEAL from a stated case heard before Gillese J. (2000), 2000 ONSC 22349, 47 O.R. (3d) 775 (S.C.J.) for a determination as to whether the plaintiff was entitled to uninsured automobile coverage.

Prasad v. Gan Canada Insurance Co. (1997), 1997 ONCA 1995, 33 O.R. (3d) 481, 27 M.V.R. (3d) 113, [1997] I.L.R. 1-3466 (C.A.) [Leave to appeal to S.C.C. refused (1997), 225 N.R. 399n] , distd Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, ss. 227, 243, 265(1), 268(1) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 22 Statutory Accident Benefits Schedule--Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672 Uninsured Automobile Coverage Regulation, R.R.O. 1990, Reg. 676, s. 10

J.M. Dillon, for appellant. Vicki Edgar, for respondent.

The judgment of the court was delivered by

[1] SHARPE J.A.: -- The respondent, Salvador Ernesto Ortiz, was injured in a motor vehicle accident in Guatemala involving an uninsured driver. The issue on this appeal is whether the territorial limit in the respondent's standard motor vehicle policy, limiting coverage to accidents occurring in Canada or in the United States, excludes the uninsured automobile coverage mandated by the Insurance Act, R.S.O. 1990, c. I.8 (the "Act"), s. 265(1).

Facts

[2] The respondent is insured pursuant to the terms of a standard contract of motor vehicle insurance issued by the appellant, the Dominion of Canada General Insurance Company, to the respondent's spouse. On April 12, 1996, the respondent was involved in a motor vehicle accident in the City of Ratahulau, Guatemala. The other motorist involved in the accident was uninsured. He seeks recovery under the uninsured automobile coverage provision of the Act for the serious injuries he sustained as a result of the accident.

[3] The parties brought a motion pursuant to Rule 22 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 stating a special case for the opinion of the court, namely, whether the respondent is entitled to uninsured automobile coverage for the injuries he sustained in the accident in Guatemala.

[4] The motions court judge found that the respondent is entitled to uninsured automobile coverage and the appellant appeals to this court.

Legislation and Policy Terms

[5] The uninsured automobile insurance coverage provisions of the standard motor vehicle policy are mandated by s. 265(1) of the Act:

265(1) Uninsured automobile coverage -- Every contract evidenced by a motor vehicle liability policy shall provide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile; and

(c) a person insured under the contract is legally entitled to recover from the identified owner or driver of an uninsured automobile as damages for accidental damage to the insured automobile or its contents, or to both the insured automobile and its contents, resulting from an accident involving an automobile,

subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations.

(Emphasis added)

[6] Territorial limits are imposed by s. 243 of the Act, but this section relates to third party liability coverage and does not apply to s. 265(1). Provision for the terms, conditions, exclusions and limits of uninsured automobile coverage is made in Uninsured Automobile Coverage, R.R.O. 1990, Reg. 676 (the "Regulation"). The Regulation contains a detailed scheme, providing for, among other matters, the determination of legal liability and quantum of damages, notice of legal action, proof of claim, limitation periods and limits on amounts payable. The Regulation also contains the following under the heading "Application of General Provisions":

10. In so far as applicable, the general provisions, definitions, exclusions and statutory conditions as contained in a motor vehicle liability policy also apply to payments under the contract under subsection 265(1) of the Act.

[7] The applicable motor vehicle liability policy is Ontario Automobile Policy Form 1 (OPF 1). Pursuant to s. 227 of the Act, the terms of this policy are subject to the regulatory approval of the Superintendent. Part E of OPF 1 sets out the general provisions, definitions and exclusions that are referred to in s. 10 of the Regulation. The matter of territorial limits is covered by s. 5.1:

5.1 Territory -- This Policy applies to loss or damage to persons or property caused by an incident that arises out of the ownership, operation or use of an automobile and that occurs in Canada, the United States of America or on a vessel travelling between ports of those countries.

Analysis

[8] The motions court judge accepted the submission of the respondent that as s. 265(1) contains no territorial limit, it was not open to the Superintendent to approve a form of policy that imposed a limit that would be inconsistent with the terms of the Act. In the view of the motions court judge, the wording [of] s. 10 of the Regulation was not sufficiently clear to incorporate by reference the territorial limit in the policy. She found that the introductory words of s. 10, "in so far as applicable" made it unclear which provisions of OPF 1 applied and that the ambiguity had to be resolved in favour of the respondent. The motions court judge relied on the decision of this court in Prasad v. Gan Canada Insurance Co. (1997), 1997 ONCA 1995, 33 O.R. (3d) 481, 27 M.V.R. (3d) 113, holding that the territorial limits of the standard form policy did not apply to preclude coverage under the Statutory Accident Benefits Provisions of the Act.

[9] I respectfully disagree with the analysis of the motions court judge and for the following reasons, I would allow the appeal and hold that the territorial limit of the policy does apply to preclude coverage to the uninsured motor vehicle provisions mandated by s. 265(1) of the Act.

[10] While I accept the proposition that in the case of conflict or inconsistency, the terms of the legislation must prevail over the terms of the Regulation or the terms of the policy, I do not agree that there is any conflict or inconsistency. Nor do I see any ambiguity in the language of the Act, the Regulations, and the policy with respect to the territorial limit on coverage.

[11] It is clear from the language of s. 265(1) of the Act that coverage with respect to an uninsured automobile is "subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations". Section 10 of the Regulation explicitly provides that the general provisions, definitions, exclusions and conditions of the motor vehicle liability policy govern recovery of benefits under s. 265(1). As I read these provisions, the legislature has authorized a scheme whereby the detailed terms for uninsured automobile coverage may be prescribed by regulation. In light of that scheme, I can see no reason why it should not be open to the Lieutenant Governor in Council, in turn, to provide for the application of the general provisions of the standard motor vehicle liability policy.

[12] I pause here to note that the language of the Act and Regulation at issue here are very different from the provisions considered by this court in Prasad, supra. That case concerned the Statutory Accident Benefits Scheme. The governing provision of the Act, s. 268(1), provided that coverage was subject to the terms, conditions, provisions, exclusions and limits set out in the Statutory Accident Benefits Schedule -- Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672. The Schedule provided for coverage where an insured person "is involved in an accident in or outside of Ontario". There was no provision comparable to s. 10 of the Regulation at issue in this appeal, making the general provisions, definitions and exclusions of the motor vehicle liability policy applicable. The court was faced with the language of a Regulation explicitly providing for coverage with respect to an accident "in or outside of Ontario" and nothing in the regulation to incorporate the territorial limit of the policy into the Statutory Accident Benefits scheme. This court found, accordingly, that as the Act and the Regulation provided for coverage with respect to accidents occurring "in or outside Ontario", the legislative language prevailed and the territorial limit of the policy had no application. This distinguishes Prasad from the present case where, by contrast, there is an explicit incorporation by reference of the general limitations of the motor vehicle liability policy.

[13] In my view, the introductory words [of] s. 10 of the Regulation, "in so far as applicable", are not so ambiguous as to preclude application of the territorial limit provision of the policy. There are many provisions of the policy which, as a matter of logic, simply cannot be applied to the uninsured motorist coverage. For example, the provisions relating to third party liability are obviously inapplicable to uninsured automobile coverage. Similarly, provisions relating to notices required where the other driver is insured could have no application. It is this category of obviously inapplicable limitation or condition to which the opening words of s. 10 refer.

Conclusion

[14] For these reasons, I conclude that territorial limit of the policy does, by virtue of the explicit language of the Act and the Regulation, apply to limit uninsured motor vehicle coverage mandated by s. 265(1) of the Act. I would, accordingly, allow the appeal, set aside the order of the motions court judge, and in its place order that the respondent is not entitled to uninsured automobile coverage for injuries resulting from the motor vehicle accident that occurred on April 12, 1996, in Ratahulau, Guatemala. While the appellant has been successful, this case did raise a novel point of interpretation, and in all the circumstances, I would make no order as to costs.

Appeal allowed without costs.