Fraczek et al. v. Pascual et al. [Indexed as: Fraczek v. Pascual]

64 O.R. (3d) 437

[2003] O.J. No. 1402

Docket No. C38210

Court of Appeal for Ontario

Carthy, Doherty and Cronk JJ.A.

April 25, 2003

Insurance -- Automobile insurance -- Statutory accident benefits -- Death benefits -- Both mother and father of deceased claiming death benefits -- Deceased dependent on both parents -- Section 25(2)(5)(i) of Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996 not obliging insurer to pay $10,000 death benefit to each person eligible under 1996 SABS for payment of benefit -- Section 25(2)(5)(i) requiring payment of single death benefit -- Insurer not required to choose between deceased's principal financial supporter and caregiver -- Joint payment of $10,000 to principal financial supporter and caregiver satisfying insurer's obligation under s. 25(2)(5)(i) -- Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96, s. 25(2)(5)(i).

After the deceased's death, her father and mother jointly applied to the father's automobile insurer for the payment of death benefits. The insurer paid a death benefit of $10,000 to the father, but denied the mother's benefit claim on the basis that s. 25(2)(5)(i) of the Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996 (the "1996 SABS") required it to pay a single death benefit of $10,000. The parents brought an action against the insurer for a declaration that the mother was entitled to receive a death benefit in the amount of $10,000. [page438] The claim was dismissed on a motion by the insurer under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The Divisional Court allowed the parents' appeal, holding that s. 25(2)(5)(i) requires an insurer to pay a $10,000 death benefit to each person eligible under the 1996 SABS for payment of the benefit. The insurer appealed.

Held, the appeal should be allowed.

An interpretation of s. 25(2)(5)(i) that requires payment of a single death benefit is the most efficacious interpretation of that section, consistent with its legislative context and purpose, and one which ensures a meaningful application of the entire benefit payment scheme established by s. 25(2) of the 1996 SABS. Consequently, only a single $10,000 benefit payment is required under s. 25(2)(5)(i). That payment, in some instances, should be paid jointly to the insured person's principal financial supporter and caregiver. Implicit in that requirement is the expectation that the joint recipients of the benefit payment will share the payment equally, or in such other proportion as they may agree. The payment in this case should have been made jointly to the deceased's mother and father. However, the declaratory relief sought by the parents concerned payment in favour of the mother of a $10,000 death benefit. That claim could not succeed.

APPEAL by an insurer from a judgment of the Divisional Court (Lang, Day and Czutrin JJ.) (2001), 2001 38749 (ON SCDC), 57 O.R. (3d) 716 allowing an appeal from a dismissal of a claim by an insured. [page439]

Cases referred to Catherwood v. Young Estate (1995), 1995 7254 (ON SC), 27 O.R. (3d) 63, 130 D.L.R. (4th) 639, [1996] I.L.R. 1-3278 (Gen. Div.); Chilton v. Co-operators General Insurance Co. (1997), 1997 765 (ON CA), 32 O.R. (3d) 161, 143 D.L.R. (4th) 647, [1997] I.L.R. 1-3423 (C.A.); G.P. v. D.J., 2000 50975 (ON SC), [2001] O.J. No. 313 (QL), [2001] I.L.R. 1-3927, 26 C.C.L.I. (3d) 76, [2001] O.T.C. 52 (S.C.); Harris v. Liberty Mutual Insurance Co., [1998] O.F.S.C.I.D. No. 55; Hills v. Canada (Attorney General), 1988 67 (SCC), [1988] 1 S.C.R. 513, 48 D.L.R. (4th) 193, 84 N.R. 86, 88 C.L.L.C. 17,011; Hisson v. Zurich Insurance Co., [2001] O.F.S.C.I.D. No. 70; Hope v. Canadian General Insurance (2002), 2002 44899 (ON CA), 212 D.L.R. (4th) 247, 158 O.A.C. 311, [2002] O.J. No. 1643 (QL), 37 C.C.L.I. (3d) 1 (C.A.); Jarvis v. Allstate Insurance Co., [1996] O.I.C.D. No. 148; Snaak (Litigation Guardian of) v. Dominion of Canada General Insurance Co. (2002), 2002 44897 (ON CA), 61 O.R. (3d) 230, [2002] I.L.R. 1-4088 (S.C.J.), affg [2001] I.L.R. 1-4000 (Ont. S.C.J.); Wilkieson-Valiente v. Wilkieson, [1996] I.L.R. 1-3351 (Ont. Gen. Div.) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 21 Statutory Accident Benefits Schedule -- Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/ 93, ss. 4, 51(5)(a) Statutory Accident Benefits Schedule -- Accidents before January 1, 1994, O. Reg. 672, ss. 3(2), 11(1)(d)(i) Statutory Accident Benefits Schedule -- Accidents on or After November 1, 1996, O. Reg. 403/96, ss. 2(6), 25 Authorities referred to Report of Inquiry into Motor Vehicle Accident Compensation in Ontario (Toronto: Queen's Printer for Ontario, 1998) Sullivan, R., Driedger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994)

Michael J. Huclack, for respondents. Paul J. Pape, for appellant State Farm Mutual Automobile Insurance Company.

The judgment of the court was delivered by

[1] CRONK J.A.: -- This appeal concerns the interpretation of the death benefit provision set out in s. 25(2)(5)(i) of the Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96, as amended (the "1996 SABS"), which forms part of Ontario's no-fault automobile insurance accident benefits system.

I. FACTS

[2] Ewelina Fraczek was tragically killed in a motor vehicle accident in 1998, when she was 17 years old. At the time of the accident, her father, Jan Fraczek, was insured by State Farm Mutual Automobile Insurance Company ("State Farm") under a standard Ontario automobile liability policy of insurance. After Ewelina's death, Jan Fraczek and Ewelina's mother, Stanislawa Fraczek, jointly applied to State Farm for the payment of death benefits. State Farm paid a death benefit of $10,000 to Ewelina's father, but denied her mother's benefit claim on the basis that s. 25(2)(5)(i) of the 1996 SABS requires it to pay only a single death benefit of $10,000.

[3] Thereafter, Jan and Stanislawa Fraczek and two of Ewelina's surviving siblings sued the owners and operators of the motor vehicles involved in the fatal accident, claiming damages for negligence. They also sued State Farm, seeking a declaration that Stanislawa Fraczek was entitled to receive a death benefit from it in the sum of $10,000.

[4] On July 17, 2000, Stinson J. of the Superior Court of Justice dismissed the respondents' claim against State Farm on a motion brought by the insurer under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In his view, where multiple death benefit payments are required by the 1996 SABS, that legislative intention is clearly expressed by reference to each potential payee. As s. 25(2)(5)(i) of the 1996 SABS contains no express reference to more than one potential payee, the motions judge concluded that only a single death benefit payment is required by that provision.

[5] On appeal, the Divisional Court disagreed, holding that s. 25(2)(5)(i) requires an insurer to pay a $10,000 death benefit to each person eligible under the 1996 SABS for payment of the [page438] benefit. Accordingly, on November 19, 2001, the Divisional Court allowed the respondents' appeal from the dismissal of their claim against State Farm, set aside the order of the motions judge, and reinstated the respondents' claim against the insurer. State Farm appeals that decision.

[6] For the reasons that follow, I agree with the motions judge. Accordingly, I would allow the appeal.

II. APPLICABLE PROVISIONS OF THE 1996 SABS

[7] As relevant to this appeal, the 1996 SABS provides as follows:12

2(6) For the purpose of this Regulation, a person is a dependant of another person if the person is principally dependent for financial support or care on the other person or the other person's spouse.

25(1) The insurer shall pay a death benefit in respect of an insured person if he or she dies as [a] result of an accident,

(2) The death benefit shall provide for the following payments:

1. A payment to the insured person's spouse of,

i. $25,000, or

ii. if the optional death and funeral benefit referred to in section 27 has been purchased and is applicable to the insured person, the amount fixed by the optional benefit.

2. A payment to each of the insured person's dependants, and to each person to whom the insured person had an obligation at the time of the accident to provide support under a domestic contract or court order, of,

i. $10,000, or

ii. if the optional death and funeral benefit referred to in section 27 has been purchased and is applicable to the insured person, the amount fixed by the optional benefit.

3. If no payment is required by paragraph 1, an additional payment of $25,000 to the insured person's dependants and the persons, other than a former spouse of the insured person, to whom the insured person had an obligation at the time of the accident to provide support under a domestic contract or court order, to be divided equally among the persons entitled. [page441]

4. A payment of $10,000 to each former spouse of the insured person to whom the insured person was obligated at the time of the accident to provide support under a domestic contract or court order.

5. A payment of $10,000 to,

i. a person in respect of whom the insured person was a dependant at the time of the accident,

ii. the spouse of a person in respect of whom the insured person was a dependant at the time of the accident, if the spouse was the insured person's primary caregiver at the time of the accident and the person in respect of whom the insured person was a dependant at the time of the accident dies before the insured person or within 30 days after the insured person, or

iii. the dependants of a person in respect of whom the insured person was a dependant at the time of the accident, if no payment is required by subparagraph i or ii, to be divided equally among the persons entitled.

(4) If at the time of the accident the insured person had more than one spouse who is entitled to a payment under this section, the payment shall be divided equally among them.

(6) In this section"spouse" means a person who was a spouse at the time of the accident.

III. THE ISSUE

[8] It is common ground that Ewelina was an "insured person" under the State Farm policy at the time of her death, thereby triggering the coverage for death benefits under the State Farm policy. Further, for the purpose of this appeal, the parties agree that Jan and Stanislawa Fraczek are both persons "in respect of whom [Ewelina] was a dependant at the time of the accident", within the meaning of s. 25(2)(5)(i) of the 1996 SABS. Accordingly, the sole issue on this appeal is whether the Divisional Court erred by concluding that s. 25(2)(5)(i) of the 1996 SABS obliges an insurer to pay a $10,000 death benefit to each person eligible under the 1996 SABS for payment of the benefit.

IV. ANALYSIS

[9] The contemporary approach to the interpretation of legislation in civil cases is aptly summarized in R. Sullivan, Driedger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994) at p. 131: [page442]

There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just.

(Emphasis added)

That general interpretative rule forms the backdrop for analysis of s. 25(2)(5)(i) of the 1996 SABS.

(1) The Purpose of Section 25(2)(5)(i)

[10] The death benefits regime under the 1996 SABS has two components. Section 25(1) imposes an obligation on insurers to pay a death benefit if an insured person dies as a result of an accident within prescribed times after the accident. In turn, s. 25(2) creates a benefit payment scheme, which establishes the classes of persons eligible to receive a death benefit, and the amount of the benefit.

[11] Under s. 25(2), the s. 25(1) death benefit must provide for payments to the following classes of persons:

(i) the insured person's spouse (s. 25(2)(1));

(ii) the insured person's dependants and other persons to whom the insured person was financially obligated at the time of the accident under a domestic contract or court order (ss. 25(2)(2) and 25(2)(3));

(iii) the former spouses of the insured person in certain circumstances (s. 25(2)(4)); and

(iv) persons in respect of whom the insured person was a dependant at the time of the accident or, in certain circumstances, the spouse or dependants of a person in respect of whom the insured person was a dependant at the time of the accident (s. 25(2)(5)).

[12] Thus, the 1996 SABS provides for compensation through a detailed payment scheme to four classes of persons who, by virtue of their relationship to an insured person, suffer loss on the death of the insured person in a car accident. The quantum of the [page443] compensation varies according to the nature of the relationship between the insured person and the claimant.

[13] The respondents assert that the payment under s. 25(2) (5)(i) usually arises on the death of a child, and that its purpose is to recognize the loss of a child's life to the person in respect of whom the child was a dependant. They also argue that each person in respect of whom the insured child was a dependant suffers a distinct loss, which is intended to be separately recognized by payment of a death benefit.

[14] The Divisional Court addressed the purpose of s. 25(2) (5)(i) in these terms: "[T]he purpose of the Regulation . . . is to provide modest financial recognition of a parent's loss of their dependant. In this case, their dependant child."

[15] In the late 1980s, a comprehensive review of motor vehicle accident compensation in Ontario was undertaken. The recommendations contained in the ensuing Report of Inquiry into Motor Vehicle Accident Compensation in Ontario (Toronto: Queen's Printer for Ontario, 1988) influenced reform of the no- fault accident benefits insurance regime in place in Ontario prior to 1990. In the Report, Osborne J. (as he then was) stated in connection with death benefits (at p. 580):

The no fault part of the standard automobile insurance policy should contain a death benefit. The death benefit should not be linked to the deceased's income, but should rather provide some reasonable short-term financial assistance to survivors, responsive to the simple recognition of the value of life. The death benefit should be modest but not insignificant. An inordinately low death benefit will trivialize the value of life; an inordinately high death benefit on the other hand, even if unrelated to income, will provide compensation for those who have little or no need for it (especially if life insurance is not deducted). Moreover, consumers should not be forced to purchase protection which is in the nature of life insurance beyond an amount which gives tangible recognition to the value of life. For those who require the additional protection generally provided by life insurance that protection should be purchased on a voluntary basis through the life insurance markets, or as part of optional coverage under the automobile policy.

[16] The purpose of the death benefit envisaged by s. 25(2) (5)(i) of the 1996 SABS, in my view, conforms to the observations of Osborne J. In recognition of the value of life, it is intended to provide modest, but not insignificant, short- term financial assistance to those who survive the loss of a dependant. For that reason, the benefit is available to defined classes of persons including, but not limited to, parents who suffer the loss of a dependent child through the tragedy of a motor vehicle accident. That legislative purpose informs the interpretation of s. 25(2)(5)(i). [page444]

(2) The Legislative History of Section 25(2)(5)(i)

[17] In Ontario, the death benefits regime concerning insured victims of fatal car accidents varies according to the date of the accident. In this case, as Ewelina died in 1998, the payment of benefits concerning her death is governed by the 1996 SABS. Had the accident occurred prior to January 1, 1994, the Statutory Accident Benefits Schedule -- Accidents before January 1, 1994, O. Reg. 672, as amended (the "1990 SABS"), would apply. Similarly, had the accident occurred after December 31, 1993 and before November 1, 1996, the Statutory Accident Benefits Schedule -- Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/93, as amended (the "1994 SABS"), would apply.

[18] As the Divisional Court properly recognized, the legislative history of a challenged statutory provision can serve as a useful indicator of legislative intent: Hills v. Canada (Attorney General), 1988 67 (SCC), [1988] 1 S.C.R. 513, 48 D.L.R. (4th) 193, at p. 528 S.C.R. In this case, in my view, the legislative history of s. 25(2)(5)(i) does not clearly establish its intended meaning. For that reason, a detailed review of the differences in the terminology of the applicable death benefits regimes under the 1990, 1994 and 1996 SABS is unnecessary. However, as two of those differences were relied upon by the Divisional Court in support of its conclusion concerning the meaning of s. 25(2)(5)(i), and as they were also the subject of lengthy submissions by the parties before this court, I briefly address them.

[19] The 1990 SABS provides for a death benefit payment to "the person upon whom the deceased was dependent", or that person's spouse in certain circumstances. Two aspects of that provision are significant. First, the concept of "dependency" under the 1990 SABS is restricted in scope: it recognizes financial dependency only, and not dependency for care or non- financial living requirements.13 In contrast, the 1994 and 1996 SABS contain a broader definition of "dependant", which recognizes principal dependency "for financial support or care". Under that expanded definition, an insured person potentially can be a dependant of all of his or her principal financial supporter, principal caregiver, and the spouses of those persons. [page445]

[20] In addition, the applicable provisions of the 1990 SABS provide for a benefit payment to "the" person upon whom a deceased was principally financially dependent or, if "that" person is dead, to the surviving spouse of "that" person, that is, to the surviving spouse of the principal financial supporter, provided that the surviving spouse was the deceased's primary caregiver (see ss. 3(2) and 11(1)(d)(i) of the 1990 SABS). The death benefit provision of the 1994 SABS contains similar language, notwithstanding the expanded concept of "dependency" under that schedule (see ss. 4 and 51(5)(a) of the 1994 SABS).

[21] The ordinary and grammatical meaning of the language of the benefit provisions under the 1990 and 1994 SABS, in my view, thus clearly contemplates the payment of a single death benefit. Under the 1990 SABS, in the first instance, the benefit is payable to the deceased's principal financial supporter. Under the 1994 SABS, in the first instance, the benefit is payable to either the deceased's principal financial supporter or principal caregiver. Under both schedules, where the principal payee is deceased, his or her surviving spouse is eligible for receipt of the benefit so long as he or she was the deceased's "primary caregiver". (See, in connection with the 1994 SABS, Harris v. Liberty Mutual Insurance Co., [1998] O.F.S.C.I.D. No. 55 and, in connection with the 1990 SABS, Jarvis v. Allstate Insurance Co., [1996] O.I.C.D. No. 148.)

[22] In contrast, s. 25(2)(5)(i) of the 1996 SABS provides for a benefit payment to "a" person "in respect of whom the insured person was a dependant" at the time of the accident. The introductory words of s. 25(2)(5)(i) in the French language version of the section read: "soit à une personne" which, in the English language, means "either to a person".

[23] The Divisional Court regarded the change from "the person" in the 1994 (and 1990) SABS to "a person" in the 1996 SABS as significant. It said: "Presumably there was a purpose for that change. Further, the subsection is, by application of the definition of dependant in s. 2(6), applicable to more than one person." The Divisional Court concluded [at para. 15]:

Given the ambiguity of the provision, the interpretation most consistent with the purpose of the legislation, the context of this section in the regulatory scheme for death benefits, the recent recognition by the legislature of caregivers in addition to financial providers, and the most efficacious interpretation, we are of the view that ss. 25(2)(5)(i) requires the insurer to make payments of $10,000.00 to each of the two persons who qualify under s. 2(6).

[24] In reliance on the Divisional Court's holding that s. 25(2)(5)(i) is ambiguous, the respondents argue that s. 25(2) (5)(i) should be interpreted in accordance with the reasonable expectations [page446] of the parties and the contra proferentem rule. They assert that if s. 25(2)(5)(i), read fairly, is capable of being interpreted as mandating either a single benefit payment or, alternatively, multiple death benefit payments, the interpretation most favourable to the insured should prevail. However, if the principles of interpretation relied upon by the respondents can have any application to the interpretation of legislation, they nonetheless apply only where there is genuine ambiguity as to the meaning of an impugned provision: Hope v. Canadian General Insurance (2002), 2002 44899 (ON CA), 212 D.L.R. (4th) 247, 158 O.A.C. 311 (C.A.) at p. 253 D.L.R., p. 315 O.A.C. and Chilton v. Co-Operators General Insurance Co. (1997), 1997 765 (ON CA), 32 O.R. (3d) 161, 143 D.L.R. (4th) 647 (C.A.)at pp. 168-69 O.R.

[25] With respect, I do not agree that s. 25(2)(5)(i) is ambiguous on its face. The rules of statutory interpretation presume that every word in a statute makes sense, and has a specific role to play in advancing the legislative purpose of the enactment: R. Sullivan, Driedger on the Construction of Statutes, supra, at pp. 159-60. Accordingly, in this case, the legislature's use of the phrase "a person" in s. 25(2)(5)(i), rather than the phrase "the person", which appears in the companion provisions of the 1990 and 1994 SABS, must be understood as purposive.

[26] In my view, the intent of the use of the phrase "a person" in s. 25(2)(5)(i) is to recognize the expanded definition of "dependant" originally introduced under the 1994 SABS and carried forward in s. 2(6) of the 1996 SABS, whereby the persons who are potentially eligible for receipt of the death benefit under s. 25(2)(5)(i) can be any of the insured's principal financial supporter, principal caregiver or, in some circumstances, the spouses of those persons. That inclusive approach to the class of potential benefit payees seeks to avoid devaluing the importance in contemporary society of caregivers, as opposed to financial supporters. The grammatical and ordinary meaning of s. 25(2)(5)(i) thus holds open the possibility that payment of a benefit under that section to more than one person can be required of the insurer. In that sense, s. 25(2)(5)(i) is not ambiguous.

(3) The Legislative Context of Section 25(2)(5)(i)

[27] The 1996 SABS provides for the payment of various benefits and expenses consequent upon the involvement in or injury of an insured in an automobile accident. Section 25(2) (5)(i) is contained in Part VII of the 1996 SABS, which concerns death and funeral benefits. It is important to recognize that s. 25(2)(5)(i) is one part only, albeit a significant part, of the larger death benefits regime established by s. 25. In that context, the language of [page447] the death benefits regime under s. 25 and of the benefit payment scheme under s. 25(2), the risk underlying the insurance coverage provided by s. 25(2)(5)(i), and the inter- relationship of ss. 25(2)(5)(i), (ii) and (iii) are relevant to determining the intended meaning of s. 25(2)(5)(i). I consider each of those factors in turn.

(a) The language of the death benefits regime: equal division of a single benefit payment

[28] It is apparent, upon review of s. 25 as a whole, that where the legislature intended that a single death benefit be equally divided by the insurer among multiple claimants, that intention is clearly expressed. Thus, s. 25(4) provides that if, at the time of the accident"the insured person had more than one spouse who is entitled to a payment" under s. 25, the payment "shall be divided equally among them". Similarly, the equal division by the insurer of one death benefit among the persons entitled to it is mandated by the express language of ss. 25(2)(3) and 25(2)(5)(iii). The absence of such language in s. 25(2)(5)(i) suggests that the legislature did not intend that an insurer divide a payment made under that section between or among multiple claimants. It does not automatically follow, however, that s. 25(2)(5)(i) does not contemplate a joint payment of a single $10,000 benefit where more than one claimant is eligible to receive the benefit.

(b) The language of the benefit payment scheme: multiple benefit payments

[29] In some instances, the language of s. 25(2) of the 1996 SABS clearly requires multiple benefit payments. For example, s. 25(2)(2) provides for "[a] payment to each of the insured person's dependants" and to "each person" to whom the insured person was financially obligated by a domestic contract or court order at the time of the accident. Similar language is contained in s. 25(2)(4), which provides for "[a] payment of $10,000" to "each former spouse" of the insured person, in certain circumstances. In contrast, although s. 25(2)(5) also provides for "[a] payment of $10,000", no express reference is made in that section to more than one payee; nor is reference made therein to "each" of several potential payees.

[30] The motions judge observed"[w]here multiple payments were contemplated to be made, the regulation expressly refers to each potential payee". The absence of express reference in s. 25(2)(5)(i) to payment of a benefit to each of several payees is one indicator of legislative intention. In this case, it favours the conclusion that s. 25(2)(5)(i) does not require payment of more than [page448] a single $10,000 death benefit. That interpretation is strengthened by the introductory language of s. 25(2)(5), which refers to "a payment of $10,000".

(c) Risk exposure under s. 25(2)(5)(i)

[31] Section 25(1) of the 1996 SABS, as a liability provision, imposes liability on insurers for the payment of death benefits in accordance with the payment scheme established by s. 25(2). Under s. 11(1)(d)(i) of the 1990 SABS and s. 51(5)(a) of the 1994 SABS, the liability of the insurer is confined to one payee. Under the former provision, the payee is the principal financial supporter of the insured. Under the latter provision, the payee is either the insured's principal financial supporter or caregiver or, in some circumstances, the surviving spouse of those persons. Can it reasonably be concluded that the legislature intended to double an insurer's risk exposure in 1996 by the mere change of the phrase "the person" to the phrase "a person" in s. 25(2)(5)(i)?

[32] In Snaak (Litigation Guardian of) v. Dominion of Canada General Insurance Co. (2002), 2002 44897 (ON CA), 61 O.R. (3d) 230, [2002] I.L.R. 1-4088 (S.C.J.), this court considered the decisions of superior court judges in Wilkieson-Valiente v. Wilkieson, [1996] I.L.R. 1-3351 (Ont. Gen. Div.) and G.P. v. D.J., 2000 50975 (ON SC), [2001] O.J. No. 313 (QL), [2001] I.L.R. 1-3927 (S.C.), in which a distinction was drawn, when interpreting exclusion clauses in insurance policies, between the phrases "an insured" and "the insured". MacPherson J.A. stated in connection with that form of reasoning (at paras. 31 and 37):

I need not finally decide whether [the distinction drawn in the Wilkieson case] is correct or incorrect. However, in my view, the distinction . . . between "an" and "the" is a fine one.

Judicial distinctions between the single words "any" and "the", and different results flowing from such distinctions, strike me as overly refined and, potentially, unfair in a matter as important as insurance coverage.

[33] While those observations applied to the interpretation of an exclusion clause in an insurance policy, in respect of which ambiguity was resolved in favour of the insured, I think that they are also apposite here. In particular, it is significant that all of the 1990, 1994 and 1996 SABS remain in force, although their application varies depending upon the date of the accident in question and, in the future, the 1990 and 1994 SABS will cease to be operative by the passage of time. The applicable death benefit provision in the 1990 and 1994 SABS requires payment of only a single death benefit. If the legislature intended to materially [page449] increase the risk exposure of insurers under the 1996 SABS concerning the same type of death benefit, payable for the same social purpose, I think that it is reasonable to assume that a clearer signification of such an intention would be evident. To conclude otherwise would result in two fundamentally different risk exposures, for the same insurance cover, conditional only on the date of the fatal accident. The value of life intended to be recognized by the death benefit does not vary with the date of death.

(d) The inter-relationship of ss. 25(2)(5)(i), (ii) and (iii)

[34] Section 25(2)(5), read as a whole, provides for "a payment of $10,000" to three classes of persons:

(a) under s. 25(2)(5)(i), to "a person in respect of whom the insured person was a dependant at the time of the accident";

(b) under s. 25(2)(5)(ii), to the spouse of "a person in respect of whom the insured person was a dependant at the time of the accident" if that person is deceased and the surviving spouse was the insured person's primary caregiver at the time of the accident; and

(c) under s. 25(2)(5)(iii), to the dependants of "a person in respect of whom the insured person was a dependant at the time of the accident", if no payment is required by s. 25(2)(5)(i) or (ii).

What meaning is to be attributed to each of those provisions?

(i) Section 25(2)(5)(iii)

[35] Section 25(2)(5)(iii) is concerned with the dependants of "a person in respect of whom the insured person was a dependant at the time of the accident". It requires a payment of $10,000 to such dependants only "if no payment is required by subparagraph i or ii". Further, a payment to dependants under that section must be "divided equally among the persons entitled". Section 25(2)(5)(iii) thus provides for receipt by dependants of the benefit otherwise payable to other persons under ss. 25(2)(5)(i) or (ii). A single benefit payment of $10,000 is contemplated, as is division of that benefit where more than one dependant exists.

[36] In my view, the alternative nature of the payment mandated by s. 25(2)(5)(iii), and the requirement thereunder for equal division of the benefit payment, confirms that a cap of $10,000 applies to the payment to be made under that section. That conclusion also informs the interpretation of ss. 25(2)(5)(i) and (ii). It strongly suggests that a cap of $10,000 applies to s. 25(2)(5) as a whole. [page450]

(ii) Section 25(2)(5)(ii)

[37] Section 25(2)(5)(ii) concerns a single potential death benefit recipient: "the spouse of a person in respect of whom the insured person was a dependant at the time of the accident". To be eligible for receipt of a benefit under s. 25(2)(5)(ii), the spouse must have been the insured person's "primary caregiver at the time of the accident". In addition, the insured's principal financial supporter must have died before, or within 30 days after, the insured person. In turn, s. 25(2)(5)(i) provides for a death benefit payment to a person in respect of whom the insured person was "a dependant" at the time of the accident. Given the definition of "dependant" under s. 2(6) of the 1996 SABS, an insured may be dependent on any of his or her principal financial supporter or caregiver, or the spouses of those persons, or some combination of them.

[38] Thus, a spouse of a deceased principal financial supporter or caregiver of the insured person may be entitled to a benefit payment under s. 25(2)(5)(i). If that section permits payment of a benefit to a spouse, in what circumstances does s. 25(2)(5)(ii) apply? Further, if s. 25(2)(5)(i) permits multiple benefit payments, that is, payment of a benefit to a spouse and to the principal financial supporter or caregiver of the insured person, is s. 25(2)(5)(ii) redundant?

[39] The following example affords an illustration of the potential redundancy of s. 25(2)(5)(ii): when (a) the insured's principal caregiver and financial supporter at the time of the accident are spouses and the parents of the insured; and (b) the insured's father is the insured's principal financial supporter and the insured's mother is the insured's principal caregiver, as the parties agree applies in this case, then both parents are eligible for a $10,000 death benefit under s. 25(2) (5)(i). The insured's mother is eligible because she was the principal caregiver of the insured at the time of the accident and, as well, because she is the spouse of the principal financial supporter of the insured. In those circumstances, if the insured's father dies before, or within 30 days after, the insured person, s. 25(2)(5)(ii) is redundant; the spouse of the insured's principal financial supporter already qualifies for a $10,000 death benefit under s. 25(2)(5)(i) because she was also the insured's principal caregiver at the time of the accident.

[40] Such redundancy is avoided, in my view, if s. 25(2)(5) (i) is interpreted as requiring payment of only a single $10,000 death benefit. Under that interpretation, the insured's father, as the insured's principal financial supporter, qualifies for a s. 25(2)(5)(i) [page451] benefit payment, as does the insured's mother and principal caregiver. However, as only a single death benefit payment may be made under s. 25(2) (5)(i), both parents cannot receive a benefit of $10,000 under that section. Does it follow that the insurer is obliged to choose between the insured's principal financial supporter and caregiver for the purpose of the benefit payment? In my view, the Divisional Court rightly rejected that proposition.

[41] Rather, I conclude that a joint payment of $10,000 to the insured's principal financial supporter and caregiver satisfies the insurer's payment obligation under s. 25(2)(5) (i), meets the objective of the section and, importantly, gives meaning to s. 25(2)(5)(ii). That approach has the following potential outcomes. First, if the insured's principal financial supporter and caregiver are spouses and the benefit payment is made jointly to them, and the principal financial supporter dies before, or within 30 days after, the insured person, the surviving spouse of that supporter is entitled under s. 25(2)(5)(ii) to receive the deceased supporter's share of the $10,000 death benefit, so long as the surviving spouse was the insured person's primary caregiver at the time of the accident. As the principal caregiver of the insured, who is eligible to share in the benefit payment under s. 25(2)(5)(i), is also the person who was the "primary" caregiver of the insured at the time of the accident, he or she thus receives part of the $10,000 death benefit under s. 25(2)(5)(i) and the remaining part of the $10,000 death benefit under s. 25(2)(5) (ii), so long as the caregiver was also the spouse of the insured person's principal financial supporter. In the result, the insured's caregiver ultimately receives the entire $10,000 death benefit.

[42] Alternatively, it is possible that the insured person's principal financial supporter and caregiver at the time of the accident are not spouses. That scenario results in the following outcome: the $10,000 death benefit under s. 25(2)(5) (i) is payable in the first instance jointly to the principal financial supporter and caregiver. If the principal financial supporter dies before, or within 30 days after, the insured person, his or her surviving spouse is not eligible for receipt of any part of the death benefit because, under s. 25(2)(5)(ii), he or she was not the "primary" caregiver of the insured person at the time of the accident and, under s. 25(2) (5)(i), he or she was not the "principal" caregiver of the insured person at the time of the accident. In the result, the entire $10,000 death benefit is payable to the insured person's principal caregiver under s. 25(2)(5)(i) and s. 25(2)(5)(ii) does not apply. [page452]

[43] As appears from the foregoing examples, under either scenario, the principal caregiver of the insured person receives the entire $10,000 death benefit upon the death of the insured person's principal financial supporter, either by application of s. 25(2)(5)(i) or by the combined operation of s. 25(2)(5)(i) and (ii). That outcome accords with the expanded concept of "dependency" which underlies s. 25(2)(5)(i), by recognizing the benefit entitlement under that section of both the principal financial supporter and caregiver. It also avoids the redundancy of s. 25(2)(5)(ii). Further, it is consistent with the indication in s. 25(2)(5)(iii) that a cap of $10,000 applies to the entirety of s. 25(2)(5). Finally, it advances the purpose of the death benefit by ensuring that the benefit is paid in full to the person or persons who principally supported the deceased insured during his or her life.

[44] The respondents advance a different interpretation of ss. 25(2)(5)(i) and (ii). They argue that multiple payments under s. 25(2)(5)(i) need not result in the redundancy of s. 25(2)(5)(ii). They submit that when: (a) the insured's principal caregiver and financial supporter at the time of the accident are spouses; and (b) the principal financial supporter dies before, or within 30 days after, the insured person, then the principal caregiver of the insured person qualifies under s. 25(2)(5)(i) for a $10,000 benefit payment and under s. 25(2) (5)(ii) for an additional $10,000 benefit payment.

[45] The respondents' argument has been accepted by some insurance arbitrators in Ontario (see, for example, Hisson v. Zurich Insurance Co., [2001] O.F.S.C.I.D. No. 70). It is a possible interpretation of the application of ss. 25(2)(5)(i) and 25(2)(5)(ii). However, I am not persuaded that it is the most reasonable interpretation. It would result in the payment of multiple $10,000 death benefits, by the combined operation of ss. 25(2)(5)(i) and (ii), in the absence of a clear indication of a legislative intention to require same, and in the face of a clear requirement for multiple benefit payments contained in other provisions of the same benefit payment scheme of which ss. 25(2)(5)(i) and (ii) form a part. In addition, it is inconsistent with the terms of s. 25(2)(5) (iii), which suggest that a single death benefit of $10,000 is contemplated under both that section and under s. 25(2)(5) as a whole. Finally, in my view, it is also inconsistent with the recommendation of Osborne J., in his Report of Inquiry into Motor Vehicle Accident Compensation in Ontario, supra, concerning death benefits. In considering the reform of the death benefits regime in effect in Ontario prior to 1990, under which "dependency" was related [page453] to financial dependency on the "head of the household" or his or her spouse, Osborne J. said (at p. 581):

[I]n my view, the death benefit should be $25,000 for the death of the head of the household or the death of the spouse of the head of the household. An additional $10,000 should be paid for each dependant of the head of the household or spouse. If a dependant child is killed, the death benefit would be $10,000.

(Emphasis added)

(4) Conclusion

[46] I conclude that an interpretation of s. 25(2)(5)(i) that requires payment of a single death benefit is the most efficacious interpretation of that section, consistent with its legislative context and purpose, and one which ensures a meaningful application of the entire benefit payment scheme established by s. 25(2) of the 1996 SABS, including s. 25(2)(5) (ii). Consequently, only a single $10,000 benefit payment is required under s. 25(2)(5)(i). That payment, in some circumstances, should be paid jointly to the insured person's principal financial supporter and caregiver. Implicit in that requirement is the expectation that the joint recipients of the benefit payment will share the payment equally, or in such other proportion as they may agree.

[47] In this case, State Farm paid the $10,000 death benefit under s. 25(2)(5)(i) to Jan Fraczek, as Ewelina's principal financial supporter at the time of the accident. In accordance with the observations of the motions judge and these reasons, that payment should have been made jointly to Jan and Stanislawa Fraczek. However, the declaratory relief sought by the respondents against State Farm concerns payment in favour of Stanislawa Fraczek of a $10,000 death benefit. That claim cannot proceed.

V. DISPOSITION

[48] Accordingly, for the reasons given, I would allow the appeal. As State Farm does not seek its costs of this appeal, I would award no costs.

Appeal allowed. [page454]

Notes

Note 1: Sections 2(6) and 25 of the 1996 SABS were amended by O. Reg. 114/00 to include reference to same-sex partners. In these reasons, all references to the 1996 SABS are to the version of that schedule in effect in 1998.

Note 2: Prior to introduction in June 1990 of the definition of "dependant" under the 1990 SABS, eligibility for death benefits in Ontario focused on "dependent relatives". The definition of "dependant" under s. 3(2) of the 1990 SABS, which is concerned with "principal dependence" for financial support, is narrower in scope: see Catherwood v. Young Estate (1995), 1995 7254 (ON SC), 27 O.R. (3d) 63, 130 D.L.R. (4th) 639 (Gen. Div.) at pp. 80-81 O.R.