CITATION: Primmum Insurance v. L’Unique Assurances Générales, 2022 ONSC 6336
OTTAWA COURT FILE NO.: DC-21-02647
DATE: 2022/11/09
ONTARIO
SUPERIOR COURT OF JUSTICE
(Divisional Court)
IN THE MATTER of the Insurance Act, R.S.O. 1990, c. I.8, s. 275, and Regulation 283/95
AND IN THE MATTER of the Arbitration Act, S.O. 1991, c. 17
AND IN THE MATTER of an Arbitration
B E T W E E N:
PRIMMUM INSURANCE COMPANY
Applicant (Respondent)
– and –
L’UNIQUE ASSURANCES GÉNÉRALES INC.
Respondent (Appellant)
Catherine Korte and Ryan Taylor, counsel for the Respondent
Debbie Orth, counsel for the Appellant
HEARD: January 20, 2022
(By Videoconference)
REASONS FOR DECISION
APPEAL by L’Unique Assurances Générales Inc. from the arbitrator’s decision dismissing L’Unique’s motion for an order dismissing the application by Primmum Insurance Company for loss transfer indemnity under s. 275 of the Insurance Act.
Corthorn J.
Introduction
[1] In November 2011, Kyle Broomer was 17 years old and living with his father, Douglas Broomer and his stepmother, Emma Lavigne On November 20, 2011, Kyle crossed Carling Avenue and was struck by a car insured by L’Unique Assurances Générales (“L’Unique”).
[2] As of November 2011, Doug owned a motorcycle that he insured with Primmum Insurance Company (“Primmum”). No cars were listed on the policy that insured the motorcycle (“Doug’s policy”). Also as of November 2011, Emma owned two cars, both of which were insured with Primmum (“Emma’s policy”). Doug was a listed driver on Emma’s policy. No motorcycles were insured under Emma’s policy.
[3] The parties acknowledge that at the time of the accident, Kyle was dependant on both his father and stepmother. As a dependant, Kyle was entitled to claim accident benefits under either Doug’s policy or Emma’s policy.
[4] Since the accident, Kyle has been receiving Statutory Accident Benefits (“SABs”) from Primmum; the SABs are paid under Doug’s policy.
[5] As the insurer of the car by which Kyle was struck, L’Unique received an application from Primmum for indemnification of the SABs paid to Kyle. The application was made pursuant to section 275 of the Insurance Act, R.S.O. 1990, c. I.8 (“the Act”). The application led to an indemnity dispute between L’Unique and Primmum. The two insurers selected an arbitrator to conduct a hearing and determine the outcome of the indemnity dispute.
[6] L’Unique brought a pre-hearing motion before the arbitrator for, (a) declaratory relief related to the substantive issues to be determined as part of the arbitration hearing; and (b) an order for production of documents by Primmum. The arbitrator dismissed the pre-hearing motion.
[7] L’Unique was successful, before this court, on its appeal from the arbitrator’s interim decision: Primmum Insurance Company v. L’Unique Assurances Générales Inc., 2017 ONSC 5235 (“the first appeal”). The relief granted included a declaration that how Kyle’s SABs claim came to be adjusted under Doug’s policy as opposed to under Emma’s policy was to be considered by the arbitrator when determining the indemnity dispute. In addition, Primmum was ordered to produce documents related to its treatment of SABs claims when more than one policy exists pursuant to which an insured may make such a claim. Last, Primmum was ordered to produce documents and other materials related to Doug and/or Kyle and the choice of policy pursuant to which the SABs claim was made.
[8] The parties agree that Primmum complied with the production order. Primmum also produced an affidavit from David Lawrence. As of early 2021, when Mr. Lawrence was cross-examined on his affidavit, he was an employee of Primmum and had, for 13 years, held the position of Alternative Dispute Resolution Co-ordinator. Mr. Lawrence addressed how SABs claims are made generally and Doug’s communication with Primmum following Kyle’s accident.
[9] The arbitration hearing was conducted in early 2021. On April 9, 2021, the arbitrator released the decision from which L’Unique appeals to this court.
The Arbitrator’s Decision
[10] The arbitrator concluded that Kyle’s SABs claim “was made pursuant to a policy of insurance that insured only a motorcycle and therefore Primmum is entitled to claim indemnity pursuant to s. 275 of the Act for [SABs] paid to or on behalf of Kyle” (para. 162). In summary, the arbitrator dismissed L’Unique’s motion.
[11] Set out below is a list of some of the findings made and conclusions reached by the arbitrator in support of his decision dismissing L’Unique’s motion:
• For the purpose of s. 268, establishing priorities for responding to a SABs claim, the ranking system is based on insurers and not on policies (paras. 99-113);
• There was only one insurer who was the insurer responsible under s. 268(2) to pay SABs to or on behalf of Kyle. There was no election or choice of insurer to be made by Doug when he contacted Primmum (paras. 129-132);
• If the arbitrator is wrong in that regard, then, based on the evidence, in his first communication with Primmum, Doug identified his policy (insuring only a motorcycle) as the policy pursuant to which the SABs claim was being advanced (paras. 138, and 142-149); and
• As the first insurer to receive a completed application for benefits, Primmum was required to begin adjusting the claim and paying benefits (para. 134).
[12] The four bullet points listed above summarize approximately 70 paragraphs of analysis and conclusions in the decision. More specific references to the decision are addressed in sections of these reasons which follow below.
The Grounds of Appeal
[13] In their notice of appeal, L’Unique relies on a series of what it describes as unreasonable findings of fact which resulted in errors of law. Fourteen such findings are listed. In addition, L’Unique relies on sixteen findings which it submits constitute errors of law.
[14] In its factum on the appeal, the approach taken by L’Unique is more focussed. L’Unique (a) raises four potential errors of law, and (b) questions the reasonableness of five findings of fact made or conclusions reached by the arbitrator:
Did the arbitrator err in finding that the legislature did not intend to distinguish between policies in s. 268 of the Insurance Act? L’Unique submits that the arbitrator failed to consider the definitions of “insurer” and “policies” set out in the Act.
Did the arbitrator fail to follow the requisite steps in determining certain evidentiary issues?
Did the arbitrator err in law in distinguishing the findings in:
a) TD General Insurance Company v. Markel Insurance Company, 2014 ONSC 6461;
b) Lumbermens Mutual Casualty v. Lombard Canada Insurance Company, February 19, 1998 (Arbitrator Malach);
c) Security National v. Markel (2009), 2009 CarswellOnt 7097; and
d) Jevco Insurance Co. v. Pilot Insurance Co., 2003 5265 (ON SC).
Did the arbitrator err in finding that Primmum met the burden of proof to establish that an informed choice was made by either Kyle or Doug with respect to the SABs claim?
Was it reasonable for the arbitrator to conclude that:
a) there was no difference between the two Primmum policies;
b) Doug was aware of what coverages were available to him through receiving a notice of renewal of the policy;
c) it was the claimant’s responsibility to find out more about the two Primmum policies;
d) Doug’s statement to Primmum that “no everything is with you” denoted that Doug was made aware of the fact that there was more than one policy under which the SABs claim could be made;
e) the claimant was aware of his right to choose which policy; and
f) on a balance of probabilities, the claimant chose, selected, or opted to proceed under the motorcycle policy.
[15] At para. 61 of his decision, the arbitrator captured the core of L’Unique’s position on the arbitration: “[Primmum] cannot show that the claimant exercised his discretion to seek SABs under the motorcycle policy.” On the appeal to this court, the core of L’Unique’s position is much the same as that described by the arbitrator. Before this court, L’Unique focusses on the two policies of insurance issued by Primmum under which Kyle could have claimed SABs and how a choice, if any, was made between the two policies.
[16] In response, Primmum submits that when the grounds of appeal and issues raised by L’Unique are considered as a whole, they can be reduced to the following two issues. For Primmum to be entitled to indemnification under s. 275, does it have to (a) establish that Doug’s motorcycle policy ranked in priority over Emma’s motor vehicle policy; and (b) demonstrate that the applicant (Kyle) made an informed choice to apply for SABs under the motorcycle policy?
[17] Primmum’s position is that the answer to both questions is “no”, the appeal should be dismissed, and Primmum is entitled to indemnification from L’Unique pursuant to s. 275 of the Act.
[18] As I explain below, I find no error in the arbitrator’s analysis. The arbitrator’s decision is consistent with the applicable legal principles. The arbitrator’s factual findings and conclusions are supported by the evidence. In summary, the appeal is dismissed.
Standard of Review
[19] The parties agree that the standard of review is reasonableness. At para. 23 of the first appeal, the reasons why, on an appeal from a decision of an arbitrator in an insurance arbitration, the standard of review is reasonableness are reviewed and need not be repeated here.
[20] Guidelines for the application of the standard of review of reasonableness are set out in para. 47 of the Supreme Court of Canada decision in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 (paras. 24 and 25). In summary, reasonableness is a deferential standard. Of primary concern is the existence of justification, transparency, and intelligibility in the decision-making process. A secondary concern is whether the arbitrator’s decision “falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law” (Ibid).
Statutory and Regulatory Framework
[21] An insurer paying SABs is entitled, in certain circumstances, to indemnification from another insurer for benefits paid. Subsection 275(1) of the Act provides:
The insurer responsible under subsection 268(2) for the payment of statutory accident benefits to such classes of persons as may be named in the regulations is entitled, subject to such terms, conditions, provisions, exclusions and limits as may be prescribed, to indemnification in relation to such benefits paid by it from the insurers of such class or classes of automobiles as may be named in the regulations involved in the incident from which the responsibility to pay the statutory accident benefits arose.
[22] The wording of s. 275(1) makes it clear that entitlement to indemnification is not absolute; it is “subject to such terms, conditions, provisions, exclusions and limits as may be prescribed”. Some of the terms and conditions, etc. are set out in the balance of s. 275. For example, the fault determination rules apply to indemnification for the first $2,000 of SABs paid (ss. 275(2) and (3), respectively).
[23] Other terms and conditions, etc. are prescribed by a regulation pursuant to the Act (“Automobile Insurance”, R.R.O. 1990, Reg. 664 (“the Regulation”)). Section 9 of the Regulation provides definitions for some of the terms that appear in section 275 of the Act. In addition, section 9 sets out the criteria for entitlement to indemnification. Only when those criteria are met is an insurer paying SABs entitled to indemnification from another insurer.
[24] In s. 9(1) of the Regulation, a “first party insurer” is defined as “the insurer responsible under s. 268(2) of the Act for the payment of statutory accident benefits”. The insurer required to indemnify a first party insurer pursuant to section 275 for SABs paid is defined by s. 9(1) of the Regulation as the “second party insurer”.
[25] The circumstances in which a first party insurer is entitled to indemnification from a second party insurer for SABs paid are set out in ss. 9(2)(a) and (b) of the Regulation. For the purpose of the indemnity dispute between Primmum and L’Unique, only s. 9(2)(a) is relevant. It provides:
A second party insurer under a policy insuring any class of automobile other than motorcycles, off-road vehicles and motorized snow vehicles is obligated under section 275 of the Act to indemnify a first party insurer,
(a) if the person receiving statutory accident benefits from the first party insurer is claiming them under a policy insuring a motorcycle and,
(i) if the motorcycle was involved in the incident out of which the responsibility to pay statutory accident benefits arises, or …
[26] Primmum asserts that it is a first party insurer entitled to indemnification because Kyle “is claiming” SABs under a policy insuring a motorcycle (Doug’s policy) and Doug’s motorcycle is the only vehicle insured under the policy.
[27] To be entitled to indemnification under s. 275, the first party insurer must establish that it is the “insurer responsible under s. 268(2) for the payment of” SABs. Sections 268(2) to (5.2) set out the rules that apply to determine which insurer is liable to pay SABs. The arbitrator referred to three sections of the Act as “a priority scheme” (para. 93). He noted that the scheme has been described as intended to find “the highest-ranking insurer” (para. 93).
[28] It is undisputed that, as a pedestrian, Kyle was a non-occupant and therefore a claimant to whom s. 268(2), item 2 applied. The ranking or priority scheme for non-occupant claimants is set out therein as follows:
i. the non-occupant has recourse against the insurer of an automobile in respect of which the non-occupant is an insured,
ii. if recovery is unavailable under subparagraph i, the non-occupant has recourse against the insurer of the automobile that struck the non-occupant,
iii. if recovery is unavailable under subparagraph i or ii, the non-occupant has recourse against the insurer of any automobile involved in the incident from which the entitlement to statutory accident benefits arose,
iv. if recovery is unavailable under subparagraphs i, ii or iii, the non-occupant has recourse against the Motor Vehicle Accident Claims Fund.
[29] It is undisputed that Kyle was an “insured” within the meaning of s. 3(i)a)(i) of O. Reg. 34/10, Statutory Accident Benefits Schedule (SABs). The arbitrator concluded and the parties agree that, as a 17-year-old dependant of both Doug and Emma, Kyle was entitled to claim benefits under both Primmum policies (paras. 94-97).
[30] The parties differ in their respective interpretations of ss. 268(4), (5), and (5.1) of the Act. Those sections address what happens if a person has recourse against more than one insurer under either subparagraph i or iii of s. 268(2), paragraph 2:
Choice of insurer
(4) If, under subparagraph i or iii of paragraph 1 or subparagraph i or iii of paragraph 2 of subsection (2), a person has recourse against more than one insurer for the payment of statutory accident benefits, the person, in his or her absolute discretion, may decide the insurer from which he or she will claim the benefits.
Same
(5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is the spouse or a dependant, as defined in the Statutory Accident Benefits Schedule, of a named insured, the person shall claim statutory accident benefits against the insurer under that policy.
Same
(5.1) Subject to subsection (5.2), if there is more than one insurer against which a person may claim benefits under subsection (5), the person, in his or her discretion, may decide the insurer from which he or she will claim the benefits.
[31] Disputes between insurers as to which insurer is required to pay benefits under the Act are resolved pursuant to O. Reg. 283/95, Disputes Between Insurers. Under s. 2.1(6) of that regulation, the first insurer that receives a completed application for benefits is required – the verb “shall” is used – to pay benefits pending the resolution of a dispute.
[32] I pause to emphasize that the issues on this appeal do not relate to a dispute between insurers within the meaning of O. Reg. 283/95. Solely as a result of the position taken by L’Unique on this appeal is it necessary to consider s. 268 of the Act.
Analysis
[33] I approach the determination of this appeal by dealing first with the two broad issues put forward by Primmum. Issues specifically identified by L’Unique and not addressed in the analysis of Primmum’s two broad issues are dealt with thereafter.
Issue No. 1 - For Primmum to be entitled to indemnification under s. 275 of the Act, does it have to establish that Doug’s motorcycle policy ranked in priority over Emma’s motor vehicle policy?
[34] The question posed in Primmum’s Issue No. 1 encompasses L’Unique’s first issue: “Did the arbitrator err in finding that the legislature did not intend to distinguish between policies in s. 268 of the Insurance Act?” For the reasons which follow, I answer both Issue No. 1 and the first question posed by L’Unique in the negative. I agree with the arbitrator’s analysis and conclusions (paras. 92-115).
[35] L’Unique’s position both on the motion and this appeal is that the word “insurer”, as it appears in s. 268(2), is to be interpreted in such a manner that the section contemplates a ranking of insurance policies, disputes as between the policies once ranked, and a requirement to resolve such disputes even if the subject policies are issued by the same insurer. That interpretation is not supported by either (a) the definitions of “policy” and “insurer” in s. 1, or (b) the references in s. 268 to “insurer” at times and to “policy” at others.
[36] The lack of support for that position was succinctly addressed by the arbitrator at paras. 111 and 112 of his decision:
The intent of [s. 268] is to determine a ranking of insurers to provide for a relatively quick method of getting accident benefit payments into the hands of accident victims and then provide a mechanism as between insurers to determine which insurer should ultimately bear the burden of such payments.
If the legislature had intended to create a scheme of priorities between policies, they could have done so but they did not. [Emphasis in original.]
[37] I turn next to the second of the two issues identified by Primmum.
Issue No. 2 - For Primmum to be entitled to indemnification under s. 275 of the Act does it have to demonstrate that the applicant (Kyle) made an informed choice to apply for SABs under the motorcycle policy?
[38] The question posed in Primmum’s Issue No. 2 encompasses L’Unique’s second, fourth, and fifth issues. For ease of reference, I repeat those issues here:
Did the arbitrator fail to follow the requisite steps in determining certain evidentiary issues?
Did the arbitrator err in finding that Primmum met the burden of proof to establish that an informed choice was made by either Kyle or Doug with respect to the SABs claim?
Was it reasonable for the arbitrator to conclude that:
a) there was no difference between the two Primmum policies;
b) Doug was aware of what coverages were available to him through receiving a notice of renewal of the policy;
c) it was the claimant’s responsibility to find out more about the two Primmum policies;
d) Doug’s statement to Primmum that “no everything is with you” denoted that Doug was made aware of the fact that there was more than one policy under which the SABs claim could be made;
e) the claimant was aware of his right to choose which policy; and
f) on a balance of probabilities, the claimant chose, selected, or opted to proceed under the motorcycle policy.
[39] For the following reasons, I answer Issue No. 2 and L’Unique’s second, fourth, and fifth questions in the negative. Once again, I agree with the arbitrator’s analysis and conclusions as they relate to these issues.
[40] To a large extent, the outcome of these issues stems from the outcome under Issue No. 1 and L’Unique’s first question. There was only one insurer to whom Kyle could make an application for benefits – Primmum. As found by the arbitrator, at para. 130, as a result “there was no choice or election that Doug was required to make.” It is important to highlight that conclusion is the arbitrator’s primary one on the subject of choice of policies.
[41] The arbitrator reached a secondary or alternative conclusion related to the choice of policies. He did so solely to address the possibility that he is wrong in his primary conclusion. The arbitrator concluded Doug made an informed choice in selecting the motorcycle policy under which the application for benefits would be made.
[42] At paras. 142-159 of his decision, the arbitrator reviews the evidence of the communication between Doug and Primmum. The arbitrator clearly identifies the evidence he considered, including a recording of Doug’s initial telephone conversation with a Primmum representative and the claims file documents. That review is set out in more than 30 bullet points in para. 40 of the decision; the review spans three and one-half pages of the decision.
[43] I turn next and specifically to L’Unique’s second, fourth and fifth questions. Based on the arbitrator’s thorough review of the evidence and his secondary or alternative decision with respect to choice of policies, I find that the arbitrator considered how Kyle’s claim for benefits came to be adjusted under Doug’s policy as opposed to Emma’s policy. The arbitrator made no error in that regard.
[44] With respect to L’Unique’s fourth question, it has not satisfied this court that, for the purpose of an indemnity dispute under s. 275, Primmum has an onus to establish that either Doug or Kyle made an informed choice with respect to the policy under which the benefits claim would be made.
[45] L’Unique’s fifth question relates to the secondary or alternative conclusion reached by the arbitrator (i.e., in the event his primary conclusion is wrong). Based on the arbitrator’s thorough review of the evidence and the conclusions he reached with respect to L’Unique’s questions 5(a)-(f), I find that the conclusions fall “within the range of possible, acceptable outcomes”: see Dunsmuir, at para. 47. The conclusions are defensible in respect of the facts and law (Ibid).
L’Unique’s Questions on Appeal
[46] Only L’Unique’s third question remains unanswered. Did the arbitrator err in law in distinguishing the findings in each of the four decisions listed in para. 14, above? Once again, I agree with the arbitrator’s analysis and conclusions. I find that the arbitrator did not, in that portion of his decision, make any error.
[47] The third question is premised upon the arbitrator having distinguished each of the four decisions cited by L’Unique. With respect to TD General Insurance, the first of the four decisions, the arbitrator relied on that decision in emphasizing the obligation on an insurer who first receives a completed application for applicant benefits – to begin adjusting the claim and paying benefits even if the insurer intends to advance a dispute under O. Reg. 283/95 (para. 105). The premise for L’Unique’s third question or ground of appeal simply does not exist with respect to TD General Insurance.
[48] The decisions in Lumbermens, Security National, and Jevco each relate to priority disputes under s. 268; the decisions are not relevant to an indemnity dispute under s. 275. At paras. 119-127 of his decision, the arbitrator reviewed those decisions in that context. I find no error on the arbitrator’s part in his consideration of those decisions. The arbitrator fully-appreciated that the dispute before him was one as between insurers in the context of an indemnity dispute and not a priority dispute within the meaning of s. 268 of the Act and O. Reg. 283/95.
Disposition
[49] For the reasons set out above, I dismiss L’Unique’s appeal from the April 2021 decision of the arbitrator.
Costs
[50] As the successful party on the appeal, Primmum is entitled to its costs of the appeal. If the parties are unable to resolve the issues of the scale on which costs are payable and the quantum of costs to which Primmum is entitled, then the parties shall deliver written submissions, restricted to one or both of those two issues, as follows:
a) The parties’ submissions shall be limited to a maximum of four pages (excluding their respective bills of costs);
b) Written submissions shall comply with the format prescribed by r. 4 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194;
c) Copies of any case law or other authorities relied on shall be provided with the submissions and shall comply with r. 4 of the Rules with respect to font size;
d) Submissions, including copies of case law or other authorities, shall be filed with the court electronically in accordance with the most recent notice to the profession in that regard;
e) Primmum shall deliver its written submissions within 15 days of the date of these reasons. L’Unique shall deliver its responding submissions within 30 days of the date of these reasons. Primmum shall deliver its reply submissions, if any, within 40 days of the date of these reasons.
[51] If no submissions are delivered pursuant to subparagraph (e) above, there will be no further order with respect to the costs of the appeal.
Date: November 9, 2022
Madam Justice S. Corthorn
CITATION: Primmum Insurance v. L’Unique Assurances Générales, 2022 ONSC 6336
OTTAWA COURT FILE NO.: DC-21-02647
DATE: 2022/11/09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
PRIMMUM INSURANCE COMPANY
Applicant (Respondent)
– and –
L’UNIQUE ASSURANCES GÉNÉRALES INC.
Respondent (Appellant)
REASONS FOR DECISION
Madam Justice S. Corthorn
Released: November 9, 2022