TD General Insurance Company v. Baughan, 2013 ONSC 333

TD General Insurance Company v. Baughan

[Indexed as: TD General Insurance Co. v. Baughan]

Ontario Reports

Ontario Superior Court of Justice,

E. Macdonald J.

March 8, 2013

114 O.R. (3d) 705 | 2013 ONSC 333

Case Summary

Insurance — Automobile insurance — Interpretation and construction — Insured seriously injured in motor vehicle accident in United States Virgin Islands — Term "United States of America" in territorial limits provisions of Insurance Act, Statutory Accident Benefits Schedule, Ontario Automobile Policy ("OAP 1") and OPCF-44R Endorsement being ambiguous — Doctrine of contra proferentum applying to Act, Schedule, OAP 1 and OPCF-44R Endorsement — "United States of America" including United States Virgin Islands for purposes of insured's claims for accident benefits coverage and underinsurance coverage — Insurance Act, R.S.O. 1990, c. I.8 — Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10. [page706]

The respondent was seriously injured in a motor vehicle accident that took place in the United States Virgin Islands. She applied to the applicant insurer for statutory accident benefits and underinsurance coverage in relation to the accident. The applicant brought an application to deny coverage on the basis that the accident occurred outside the territorial limits set out in the Insurance Act, the Statutory Accident Benefits Schedule -- Effective September 1, 2010, O. Reg. 34/10, the Ontario Automobile Policy ("OAP 1")and the OPCF-44R Endorsement as the term "United States of America" does not include the United States Virgin Islands.

Held, the application should be dismissed.

The term "United States of America" in the territorial limits provisions of the Act, the Schedule, OAP 1 and the OPCF-44R Endorsement is ambiguous. The doctrine of contra proferentum could be applied to the Act, the Schedule, OAP 1 and the OPCF-44R Endorsement to construe any ambiguity in favour of the respondent. The term "United States of America" included the United States Virgin Islands for the purposes of the respondent's claims for accident benefits coverage and underinsurance coverage.

Cases referred to

Abdulkarim v. Wawanesa Mutual Insurance Co. (August 13, 2007), FSCO A05-002913 (FSCO); Arts (Litigation Guardian of) v. State Farm Insurance Co. (2008), 2008 25055 (ON SC), 91 O.R. (3d) 394, [2008] O.J. No. 2096, 65 C.C.L.I. (4th) 285, 168 A.C.W.S. (3d) 625 (S.C.J.); Aviva Canada Inc. v. Pastore (2012), 112 O.R. (3d) 523, [2012] O.J. No. 4508, 2012 ONCA 642, 38 M.V.R. (6th) 177, 296 O.A.C. 281, [2012] I.L.R. I-5350, 12 C.C.L.I. (5th) 1, 355 D.L.R. (4th) 265, 220 A.C.W.S. (3d) 408; Cabell v. Personal Insurance Co. (2011), 104 O.R. (3d) 709, [2011] O.J. No. 622, 2011 ONCA 105, 278 O.A.C. 51, 331 D.L.R. (4th) 460, [2011] I.L.R. I-5117, 93 C.C.L.I. (4th) 28; McIntyre Estate v. Scott (2003), 2003 31493 (ON CA), 68 O.R. (3d) 45, [2003] O.J. No. 3997, 232 D.L.R. (4th) 377, 178 O.A.C. 44, 2 C.C.L.I. (4th) 163, [2003] I.L.R. I-4239, 42 M.V.R. (4th) 165, 125 A.C.W.S. (3d) 1065 (C.A.); Pilot Insurance Co. v. Sutherland (2007), 86 O.R. (3d) 789, [2007] O.J. No. 2596, 2007 ONCA 492, 51 C.C.L.I. (4th) 12, [2007] I.L.R. I-4611, 159 A.C.W.S. (3d) 280, 55 M.V.R. (5th) 38; R. v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867, [2001] S.C.J. No. 55, 2001 SCC 56, 203 D.L.R. (4th) 513, 275 N.R. 201, J.E. 2001-1823, 206 Nfld. & P.E.I.R. 304, 157 C.C.C. (3d) 353, 45 C.R. (5th) 1, 51 W.C.B. (2d) 180; Seale v. Belair Insurance Co. (January 31, 2002), FSCO A01-B-000635 (FSCO); Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129, [2002] S.C.J. No. 34, 2002 SCC 30, 210 D.L.R. (4th) 443, 286 N.R. 178, J.E. 2002-663, 158 O.A.C. 1, 36 C.C.L.I. (3d) 1, [2002] I.L.R. I-4071, 112 A.C.W.S. (3d) 950; Wigle v. Allstate Insurance Co. of Canada (1984), 1984 45 (ON CA), 49 O.R. (2d) 101, [1984] O.J. No. 3422, 14 D.L.R. (4th) 404, 6 O.A.C. 161, 10 C.C.L.I. 1, [1985] I.L.R. Â1-1863 at 7152, 30 M.V.R. 167, 29 A.C.W.S. (2d) 56 (C.A.)

Statutes referred to

Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 19(5)

Insurance Act, R.S.O. 1990, c. I.8 [as am.], ss. 243(1), (2), 268(1)

Personal Property Security Act, R.S.O. 1990, c. P.10, s. 7(1)

Rules and regulations referred to

Immigration and Refugee Protection Regulations, SOR/ 2002-227, s. 159.1

Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10 [as am.], ss. 2(3), 59(1) [page707]

APPLICATION by the insurer to deny coverage.

Jamie Pollack and Emily Schatzker, for applicant.

Deanna S. Gilbert, for respondent.

1E. MACDONALD J.: — This application is about insurance coverage issues. The applicant, TD General Insurance Company (the "insurer"), is the automobile insurance provider for the respondent, Lynn Baughan ("Ms. Baughan"). Ms. Baughan was seriously injured in a motor vehicle accident that took place in the United States Virgin Islands. As pointed out by Ms. Gilbert, counsel for Ms. Baughan, the sole question to be decided on this application is whether the term "United States of America" ought to be interpreted to include the United States Virgin Islands for purposes of accident benefits and underinsurance coverage. There is no clear answer to this question. There are facts which support an inclusive interpretation and, arguably, facts which support a strict definition.

2A brief background of the relevant facts is as follows: On January 27, 2012, Ms. Baughan was a passenger in a motor vehicle that was involved in an accident that took place on the Island of St. Thomas, in the United States Virgin Islands. As a result of the accident, Ms. Baughan suffered serious injuries.

3At the time of the accident, Ms. Baughan was insured under a valid Ontario automobile insurance policy issued by the insurer, bearing policy number 74646611. The policy included the OPCF-44R Family Protection Coverage Endorsement ("Endorsement") for underinsurance coverage.

4Ms. Baughan applied to the insurer for both statutory accident benefits and underinsurance coverage in relation to the accident.

5The insurer has brought this application to deny coverage on the basis that the accident occurred outside the territorial limits set out in the Insurance Act, R.S.O. 1990, c. I.8; the Statutory Accident Benefits Schedule -- Effective September 1, 2010, O. Reg. 34/10 (the "Schedule"); the Endorsement; and/or the Ontario Automobile Policy ("OAP 1").

Issues to be Decided on this Application

6This application comes down to a single question: Does the term "United States of America" include the United States Virgin Islands for purposes of accident benefits and underinsurance coverage in Ontario? In order to answer this question, the following sub-issues will be addressed: (a) How are the territorial [page708] limits for accident benefits and underinsurance coverage defined in Ontario? (b) Is there any ambiguity to the term "United States of America" in the context of accident benefits and underinsurance coverage in Ontario? (c) If so, can the ambiguity be resolved through general principles of statutory interpretation? (d) If the ambiguity remains, can the doctrine of contra proferentum apply to the OAP 1, the Insurance Act, the Schedule and/or the Endorsement?

Legal Submissions

A. The territorial limits as defined in Ontario

i. The Insurance Act

7Section 243(1) of the Insurance Act addresses the territorial limits for third party liability coverage. It reads as follows:

243(1) Insurance under sections 239 and 241 [third party liability for owner and non-owner policies] applies to the ownership, use or operation of the insured automobile in Canada, the United States of America and any other jurisdiction designated in the Statutory Accident Benefits Schedule, and on a vessel plying between ports of Canada, the United States of America or a designated jurisdiction.

(Emphasis added)

8Section 243(2) of the Insurance Act addresses the territorial limits for statutory accident benefits coverage. It reads as follows:

243(2) Statutory accident benefits provided under section 268 apply to the use or operation of any automobile in Canada, the United States of America and any other jurisdiction designated in the Statutory Accident Benefits Schedule, and on a vessel plying between ports of Canada, the United States of America or a designated jurisdiction.

(Emphasis added)

9Section 268(1) of the Insurance Act addresses the limits, generally speaking, that apply to statutory accident benefits. It reads as follows:

268(1) Every contract evidenced by a motor vehicle liability policy, including every such contract in force when the Statutory Accident Benefits Schedule is made or amended, shall be deemed to provide for the statutory accident benefits set out in the Schedule and any amendments to the Schedule, subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule.

ii. The Schedule

10Section 2(3) of the Schedule sets out the territorial limits for the Schedule's application. It reads as follows: [page709]

2(3) The benefits set out in this Regulation shall be provided in respect of accidents that occur in Canada or the United States of America, or on a vessel plying between ports of Canada or the United States of America.

(Emphasis added)

11Section 59(1) of the Schedule also addresses territorial limits. This is the election provision, which sets out when an insured involved in an accident outside of Ontario may elect to receive Ontario benefits as opposed to benefits that may be offered in the jurisdiction in which the accident occurred. Ms. Baughan does not have a right to elect pursuant to s. 59(1) because at the time of her accident, she was an occupant of a vehicle that was registered in the United States Virgin Islands. In any event, s. 59(1) reads as follows:

59(1) This section applies if,

(a) as a result of an accident in another province or territory of Canada or a jurisdiction in the United States of America, a person insured in that jurisdiction within the meaning of subsection (4) dies or sustains an impairment or incurs an expense described in section 15, 16, or 19; and

(b) no benefits are received under the law of the jurisdiction in which the accident occurred.

(Emphasis added)

iii. The Endorsement

12The Endorsement does not contain a specific section on territorial limits. Instead, s. 22 of the Endorsement labelled "Miscellaneous" reads as follows:

. . . Except as otherwise provided in this change form, all limits, terms, conditions, provisions, definitions and exclusions of the Policy shall have full force and effect.

(Emphasis added)

13The "limits" of the OAP 1 are not listed below this "Miscellaneous" provision for the average individual to read and understand. In fact, these "limits" are not set out anywhere in the Endorsement.

iv. The OAP 1

14Section 1.2 of the OAP 1 sets out the territorial limit for coverage under the standard provincial automobile policy. It reads as follows:

1.2 This policy covers you and other insured persons for incidents occurring in Canada, the United States of America and any other jurisdiction designated in the Statutory Accident Benefits Schedule, and on a vessel [page710] travelling between ports of those countries. All of the dollar limits described in this policy are in Canadian funds.

(Emphasis added)

15The Court of Appeal for Ontario confirmed in the decision of Pilot Insurance Co. v. Sutherland (2007), 2007 ONCA 492, 86 O.R. (3d) 789, [2007] O.J. No. 2596 (C.A.) that the territorial limits set out in s. 1.2 of the OAP 1 apply to underinsurance coverage in the Endorsement.

B. Ambiguity to the term "United States of America"

16As outlined in the section above, the term "United States of America" is used throughout the relevant Ontario provisions as a territorial limit. None of those provisions, however, provide a definition or clarity as to what is meant by the term "United States of America".

17The term is inherently complex and ambiguous as it may include any combination of the following:

(a) the 48 continental states;

(b) the two non-continental states (i.e., Hawaii and Alaska);

(c) the District of Columbia;

(d) the three unincorporated organized territories (one of which is the United States Virgin Islands);

(e) the ten unincorporated unorganized territories;

(f) the extraterritorial jurisdiction of Guantanamo Bay.

18There is no guidance under any of the relevant provisions so as to enable an average individual purchasing insurance to understand whether he or she may be covered for an accident that occurs in the United States Virgin Islands. It may be particularly confusing, given that the words "Virgin Islands" have the words "United States" before them.

C. Principles of statutory interpretation cannot resolve the ambiguity

i. Overview

19In the Supreme Court of Canada decision of R. v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867, [2001] S.C.J. No. 55, 2001 SCC 56, Iacobucci J. outlined the approach for interpreting an ambiguous statue. He stated, at para. 28: [page711]

In numerous cases, this Court has endorsed the approach to the construction of statutes set out in the following passage from Driedger's Construction of Statutes (2nd ed. 1983), at p. 87:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

ii. The grammatical and ordinary sense of the "United States of America"

20The first step in the statutory interpretation test is to determine whether the ambiguity can be resolved by turning to the grammatical and ordinary sense of the term "United States of America".

21In this case, such a simple exercise is not helpful for interpreting such an inherently complex term. I agree with Ms. Baughan's submission that the mere fact that both parties have dedicated numerous pages in their application materials to this topic lends weight to the conclusion that reading the "United States of America" in its grammatical and ordinary sense does not result in an ordinary or obvious answer.

a. The insurer's strict interpretation

22The insurer contended that in its ordinary meaning, the "United States of America" cannot be interpreted to include the United States Virgin Islands. In support of this submission, it relied in part on the affidavit of Andrew C. Simpson, an insurance defence lawyer in the United States Virgin Islands.

23Mr. Simpson swore in his affidavit that"[s] trictly speaking, only the fifty states are members of the United States of America" (emphasis added). I do not agree with Mr. Simpson's interpretation.

24First, he cited no authoritative or governmental reference for that conclusion. It appears to be his own personal proclamation. Second, if "strictly" speaking, the "United States of America" only includes the 50 states, then by inference"liberally" speaking, the "United States of America" includes something more than just the 50 states. Related to this is the third point, which is that the approach to the interpretation of insurance coverage in Ontario is not a "strict" interpretation approach. To the contrary, it is an inclusive approach.

b. Ms. Baughan's interpretation

25Ms. Baughan argued that based on Mr. Simpson's approach, the president of the United States would not live in [page712] the United States of America. However, if something other than a strict approach, as defined by Mr. Simpson, is used to interpret, in its ordinary sense, the "United States of America", then a logical result is achieved.

26Given that a rational result beckons a more liberal interpretation, the "United States of America" may reasonably include the United States Virgin Islands. Ms. Baughan has asked the court to consider the following:

(a) A person born in the United States Virgin Islands today is declared a citizen of the United States of America at birth.

(b) Residents of the United States Virgin Islands would be subject to the military draft.

(i) In other words, for purposes of potentially being compelled to die for the country, residents of the United States Virgin Islands are part of the United States of America.

(c) Residents of the United States Virgin Islands are issued a United States passport.

(d) Residents of the United States Virgin Islands may be entitled to Medicare coverage.

(e) The United States Virgin Islands are included in the definition of the "United States" for purposes of extending social security benefits.

(i) With respect to (d) and (e), the U.S. government, at significant cost, considers residents of the United States Virgin Islands to be residents of the United States of America.

(f) The United States government defines the United States Virgin Islands as a "state" for purposes of its immigration laws.

(g) Residents of the United States Virgin Islands have the right to vote for a delegate to the United States House of Representatives.

(h) The United States government issues United States of America crewmember visas to residents of the United States Virgin Islands (e.g., flight attendant, pilot, etc.).

(i) The United States State Department does not consider the United States Virgin Islands to form part of the Caribbean Region. [page713]

(j) The United States Census Bureau collects data from the United States Virgin Islands.

(k) The United States State Department does not maintain an embassy anywhere in the United States Virgin Islands.

(l) The courts in the United States Virgin Islands are districts of the United States judicial system.

c. No relevant judicial interpretations

27As far as Ms. Baughan is aware, the issue of the ordinary meaning of the "United States of America", especially for purposes of automobile insurance coverage, has never been before a Canadian or American court. I agree that the cases referred to by the insurer are not helpful on this point.

28First, the insurer cited cases where the territorial limits were addressed in accidents that occurred in Malawi and Jamaica. These cases are irrelevant. The parties can agree that neither Malawi nor Jamaica would be part of the "United States of America" in the grammatical and ordinary sense of the term.

29Second, the insurer referred to cases through Mr. Simpson's affidavit. He stated that in the 52 (presumably American) cases that he reviewed, the court was never faced with an insurance policy that solely stated the "United States of America" without further reference to territories. That is the point. This is a new issue. Those cases that Mr. Simpson did cite for a definition of the "United States of America" had nothing to do with insurance legislation (e.g., one dealt with border searches and another dealt with habeus corpus petitions).

iii. The objective of the Insurance Act and the Schedule

30The second step of the statutory interpretation test is to consider the objective of the relevant legislation.

31Gonthier J., speaking for the majority of the Supreme Court of Canada in Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129, [2002] S.C.J. No. 34, 2002 SCC 30, at para. 11, stated: "There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance" (emphasis added).

32The territorial limits in the Insurance Act were enacted through the Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21, otherwise known as Bill 59, An Act to provide Ontario drivers with fair, balanced and stable automobile insurance and to make other amendments related to insurance [page714] matters, 1st Sess., 36th Leg., Ontario, 1996. The insurer suggested that the objective of Bill 59, specifically, was to reduce the basic statutory accident benefits available under the OAP 1. Ms. Baughan did not disagree; however, reducing the benefits available to individuals does not mean reducing their preliminary entitlement to coverage.

33Bill 59 came into force following a regime known as "Bill 164", whereby tort rights were reduced in exchange for enhanced accident benefits. The purpose of Bill 59 was to alter the balance between claiming no-fault benefits and advancing tort claims against an at-fault party. In any case, the objective of Bill 59 remained consistent with the main objective of insurance law (as stated by the Supreme Court of Canada), namely, to ensure that accident victims had coverage (whether in tort, accident benefits or an appropriate combination of the two regimes) so as not to be placed at a financial hardship.

34This objective continues to be true today. In the decision of Arts (Litigation Guardian of) v. State Farm Insurance Co. (2008), 2008 25055 (ON SC), 91 O.R. (3d) 394, [2008] O.J. No. 2096, at para. 16, MacKinnon J. stated:

The SABS is remedial and constitutes consumer protection legislation. As such, it is to be read in its entire context and in their ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the legislature. The goal of the legislation is to reduce the economic dislocation and hardship of motor vehicle accident victims and, as such, assumes an importance which is both pressing and substantial.

(Emphasis added)

35Very recently, the Court of Appeal for Ontario reiterated that the Schedule ought to be interpreted in an inclusive, rather than a restrictive manner, so as to serve the purpose of the Schedule. In the decision of Aviva Canada Inc. v. Pastore (2012), 112 O.R. (3d) 523, [2012] O.J. No. 4508, 2012 ONCA 642, the court held that an inclusive interpretation of the definition of "catastrophic impairment" would be consistent with the intent of the Schedule.

36In summary, an inclusive interpretation of the "United States of America" for purposes of accident benefits and underinsurance coverage would advance the remedial objective of those insurance schemes.

iv. The intention of Parliament

37The third and final step in the statutory interpretation test is to examine the intent of Parliament, specifically, the intent behind the "United States of America" in Bill 59. [page715]

a. Intent of "United States of America" in Bill 59

38In this case, there is no evidence as to what the legislature meant by the term "United States of America" with regards to the territorial limits for accident benefits and underinsurance coverage. The fact is that although the territorial limits were enacted through Bill 59, at no point did the legislative debates specifically canvass the breadth of that term.

39Ms. Gilbert pointed out that there is an important nuance that must be considered with respect to Bill 59. In the decision of Seale v. Belair Insurance Co. (January 31, 2002), FSCO A01-B-000635 (FSCO), Arbitrator Renahan considered another new restriction that was enacted through Bill 59. In doing so, the arbitrator stated: "the fact that the legislature has narrowed coverage does not by itself mean that coverage is to be construed narrowly".

40In summary, there is no definitive evidence available as to what Parliament intended the "United States of America" to encompass in Bill 59.

b. Intent of "United States of America" in other legislation

41Upon a review of other legislation, it is apparent that Parliament has previously turned its mind to the fact that the "United States of America" can take on many meanings.

42In the paragraphs that follow, the term "United States of America" is reviewed as it appears in a sampling of other statutes. It could arguably be said that if the term "United States of America" was consistently defined across other Ontario or Canadian statutes, then perhaps the intent of Parliament as to the meaning of the term could be gleaned. The problem, however, is that there has been no consistency.

43Section 159.1 of the Immigration and Refugee Protection Regulations, SOR/2002-227 reads as follows:

159.1 The following definitions apply in this section and sections 159.2 to 159.7:

"United States" means the United States of America, but does not include Puerto Rico, the Virgin Islands, Guam or any other United States of America possession or territory.

(Emphasis added)

44The Personal Property Security Act, R.S.O. 1990, c. P.10 is presently being repealed to provide a definition for the term "U.S. State" [in s. 7(1)]: [page716]

Note: On a day to be named by proclamation of the Lieutenant Governor, subsection (3) is repealed by the Statutes of Ontario, 2006, chapter 34, Schedule E, subsection 3(2) and the following substituted:

Definitions

(4) In subsection (3),

"U.S. State" means a State of the United States of America, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States of America.

45Section 19(5) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) reads as follows:

"United States" means:

(a) the United States of America, but does not include Puerto Rico, the Virgin Islands, Guam or any other United States possession or territory[.]

46In summary, it is not possible to discern with any degree of certainty whether the legislature intended for the "United States of America" to include or exclude the United States Virgin Islands for purposes of automobile insurance coverage.

D. The doctrine of contra proferentum applies in favour of Ms. Baughan

47Applying the statutory construction test to the "United States of America" does not resolve the ambiguity. As such, the court may resort to the doctrine of contra proferentum.

i. Overview

48Typically, the doctrine of contra proferentum is applied to ambiguous terms of a contract. It is trite law that under the doctrine, the ambiguity is construed against the interests of the party that drafted the term. In the present circumstances, the ambiguous term appears, not in a typical private contract, but in legislation, a standard automobile policy and an endorsement.

ii. Application of the doctrine to insurance policies and legislation

49The issue of whether the doctrine of contra proferentum could be applied to a standard form automobile insurance policy was addressed by the Court of Appeal for Ontario in Wigle v. Allstate Insurance Co. of Canada (1984), 1984 45 (ON CA), 49 O.R. (2d) 101, [1984] O.J. No. 3422 (C.A.). [page717] The insurer in that case argued that since the policy had to be approved by the superintendent of insurance, it was distinct from the type of contract or policy that might otherwise be subject to the doctrine of contra proferentum. Cory J.A., speaking for the majority, rejected this argument. He stated as follows, at p. 116 O.R.:

It is difficult to conceive of an individual bargaining with a general insurer, either as to the terms of a standard policy of automobile insurance or with regard to the standard form of an endorsement added to that policy. Can it really be said that the average individual is capable of understanding the provisions of such a contract himself or is likely to engage his solicitor to review the terms, advise him of the dangers and complexities of the contract, what is included and what excluded from the coverage, and to then submit an amended contract to the insurer? The very concept of a standard form of insurance policy argues against this vision of equality of bargaining. The individual can do no more than accept or reject the policy. A standard form contract may have benefits for the insured by reducing the amount of his premium and for the insurer by setting out the contractual terms without the necessity of bargaining with each individual applicant.

Given these characteristics of the standard form contract, I think that it is reasonable and equitable to conclude that if the standard form is ambiguous, any ambiguity should be construed against the insurer. Surely it is the insurer who has more control of the writing of the contract. It is the insurers who will make submissions to the Superintendent of Insurance and who will accept the final standard form or determine that they will not offer that standard form of endorsement to their clientele. It would not be reasonable for the insurer to say that it did not draw up the contract, that it was really the Superintendent of Insurance who is responsible for its wording. That, I think, would be an unrealistic and unwarranted approach to the situation. Without knowing what is included and what is excluded from the coverage when the terms are ambiguous, the ordinary member of the public cannot make an informed decision as to whether he should accept or reject the standard form presented to him.

[Emphasis added]

50A similar approach was taken with regards to insurance legislation. In the decision of McIntyre Estate v. Scott (2003), 2003 31493 (ON CA), 68 O.R. (3d) 45, [2003] O.J. No. 3997 (C.A.), in the context of determining the meaning of the term "occupant" in the Insurance Act, Sharpe J.A. stated, at para. 18: "Finally, finding Deborah McIntyre to be an 'occupant' is consistent with the general principle that insurance legislation defining coverage should ordinarily be liberally construed in favour of the insured."

51Given the Court of Appeal's approach to interpreting a standard insurance policy (such as the OAP 1) and the Insurance Act, it is no surprise that the doctrine of contra proferentum has also been applied to provisions in the Schedule. In the Financial Services Commission of Ontario decision of Abdulkarim v. Wawanesa Mutual Insurance Co. (August 13, 2007), FSCO A05-002913 (FSCO), [page718] Arbitrator Rogers stated as follows:

In Hope v. Canadian General Insurance, the Court of Appeal considered whether [the doctrine of contra proferentum] applied in construing provisions of the Schedule and did not exclude its application. The Schedule is no more a document of insurers than the standard policy. I therefore find that the contra proferentum rule must be considered. I note that if applied, the rule does not lead to conflicting approaches in interpreting the term in the policy and the Insurance Act, because the consumer protection nature of the legislation would require that ambiguities in the Act also be construed in favour of the insured.

(Underlined is emphasis added; bolded is emphasis in original; footnote omitted)

52The Court of Appeal for Ontario has also confirmed that exclusions in endorsements to policies of insurance are to be strictly interpreted against the insurer. In the recent decision of Cabell v. Personal Insurance Co. (2011), 104 O.R. (3d) 709, [2011] O.J. No. 622, 2011 ONCA 105, the court considered whether a general exclusion in a property insurance policy could apply to an item listed in an endorsement to the policy, when the endorsement itself was silent as to any specific exclusion. Rosenberg J.A. stated as follows [at para. 13]:

However, if limitation of apparent coverage in an endorsement is ambiguous, the limitation should be set out in the endorsement itself. As Cory J.A. said in Wigle v. Allstate Insurance Co. of Canada . . . , in relation to underinsured motorist coverage:

Limitations on the apparent coverage in the endorsement that are ambiguous in the sense that they are not clearly apparent, should be set out in the endorsement itself. If it was the intention of the insurer that the endorsement was not to cover an "unidentified" vehicle, it would have been a simple matter to say so in the explanatory note.

[Emphasis added]

53It is important to remember that the limitation of coverage (i.e., the territorial limits) is not set out anywhere in the Endorsement itself, other than a vague reference to "limits" under the OAP 1.

54I find that the doctrine of contra proferentum may be applied to the OAP 1, the Insurance Act, the Schedule and the Endorsement to construe any ambiguity in favour of Ms. Baughan.

E. Response to insurer's further issues/submissions

i. Comparison to other standard insurance policies

55Ms. Gilbert specifically responded in oral submissions and in her factum to the points raised by the insurer. The first argument was a comparison to other standard insurance policies. [page719] The parties had both adduced evidence that some non-Ontario standard automobile policies explicitly include or exclude coverage to the United States Virgin Islands. The parties disagreed, however, as to the significance of this.

56The insurer noted that, unlike the OAP 1, the standard automobile policy in British Columbia indicates that the term "United States" includes Hawaii and Alaska. There is no mention -- one way or the other -- as to whether it includes or excludes the United States Virgin Islands.

57The insurer also noted, through the evidence of Mr. Simpson, that the New York standard automobile policy defines the territorial limits with reference to the "United States of America, its territories or possessions; Puerto Rico; or Canada".

58If understood correctly, the insurer is suggesting that the significance of these policies is that if the OAP 1 was meant to include coverage in the United States Virgin Islands, then specific reference to this territory would have been made.

59Ms. Baughan took a different approach. It was Ms. Baughan's submission that the significance of the wording of these non-Ontario policies is to emphasize that the "United States of America" as a term by itself could be interpreted in a number of ways. As such, it is necessary to include qualifying terms.

60For instance, if the drafters of the British Columbia standard policy were so confident that the term "United States of America" was unequivocal, then presumably they would not have bothered adding the qualifying words"including Hawaii and Alaska".

61In any event, the issue before this court is not a policy from British Columbia or New York. The focus ought to remain on the wording of the Ontario policy and the approach adopted by the Ontario courts with respect to the statutory interpretation of the Ontario policy.

ii. The increased costs or "floodgate" argument

62The insurer emphasized that the United States of America has a number of territories. It also suggested that the objective of Bill 59 was to reduce the costs to the insurance industry (and premiums) by reducing benefits. These submissions amount to a "floodgate" argument. In other words, the concern is that if this court were to include the United States Virgin Islands in the definition of "United States of America" for purposes of insurance coverage, there would be a "floodgate" of claims and increased costs to the system. This concern is not reasonably founded. [page720]

63The insurer, as the party seeking to deny coverage, has not adduced any evidence as to what the expected costs may be to the Ontario auto insurance industry if a liberal interpretation of "United States of America" were adopted. To the contrary, the insurer has adduced evidence that much of the other territories or jurisdictions forming the United States of America are either (a) uninhabited ecological areas or (b) under military control. In response, Ms. Gilbert posed a rhetorical question"Just how many Ontarians are going to be driving in these areas and, further, getting into accidents?"

Conclusion and Disposition

64Ms. Baughan is seeking to have the application dismissed, together with a declaration that

(a) Ms. Baughan is entitled to accident benefits coverage for her accident of January 27, 2012; and

(b) Ms. Baughan is entitled to underinsurance coverage for her accident of January 27, 2012.

65Since the doctrine of contra proforentum may be used to construe an ambiguity in the Insurance Act, the Schedule, the OAP 1 and the Endorsement in favour of Ms. Baughan, I find that the term "United States of America" includes the United States Virgin Islands for the purposes of Ms. Baughan's claims for accident benefits coverage and underinsurance coverage. Such an inclusive interpretation would also advance the remedial objectives of the insurance schemes. The insurer has not convinced me that this interpretation is untenable.

66Therefore, based on my considerations of the law as set out by the parties in their facta, I have concluded that Ms. Baughan is entitled to accident benefits coverage and underinsurance coverage for her accident of January 27, 2012.

67There will be no costs as both parties agreed prior to this application that no costs would be sought by either party.