ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No.: CV-12-453254
Date: 2013-09-20

B E T W E E N:

Jevco Insurance Company, previously known as Kingsway General Insurance Company

Applicant

• and -

Royal and Sun Alliance Insurance Company of Canada

Respondent

Counsel:
Todd J. McCarthy,
for the Applicant

John J. Aikins,
for the Respondent

Heard: September 13, 2013

WHITAKER J.:

Overview

1This is an appeal from the decision of Arbitrator J. Jay Rudolph, dated April 5, 2012 in a “Loss Transfer Arbitration”. The arbitration was held on December 12 and 13, 2011, pursuant to section 275 of the Insurance Act R.S.O. 1990, c. l.8 as amended (the “Act”).

2The appellant “Kingsway” was unsuccessful in the arbitration. The Arbitrator concluded that the Kingsway insured was 100% at fault for the collision and the loss was to be transferred to Kingsway from RSA. The respondent, ‘RSA”, opposes the appeal.

3The parties agree the standard of review of the arbitrator’s decision is reasonableness. For reasons which follow, I find the Arbitrator’s decision reasonable. The appeal is dismissed.

The Dispute Resolution Process

4The statutory scheme under the Act provides for Loss Transfer as between insurers and under specified circumstances. Where a request for transfer is made and the parties are unable to agree on the result, the Act provides for an expeditious dispute resolution process, designed for use without the necessity of counsel.

5The principal features of the process are a series of graphic and written guidelines for determining liability, arbitration in the event of disagreement and in the present case, an appeal without leave to a single judge of this court.

6Guidelines to assist the parties are now set out in the Regulations under the Act. Originally, these were developed by the insurance industry “in house”, and before their incorporation into law.

7In most cases, insurers settle these disputes on their own without the need for counsel. Where the parties cannot initially come to agreement, the Act provides for arbitration where necessary under section 275(4). It is understood that arbitrators recruited by the parties for these purposes possess an expertise in this subject matter. This attracts a degree of deference (see Aviva Insurance Company of Canada v. Royal & Sun Alliance Insurance Company, 2008 41817 (ON SC), [2008] O.J. No 3240 and Motors Insurance Corporation v. Old Republic Insurance Company, [2009] 68-CV-369244).

8In loss transfer arbitration proceedings, the parties acknowledge the standard of review is one of reasonableness.

The Arbitration

9The arbitration proceeded by way of written agreed statement of facts. The parties also agreed to have the arbitrator hear oral and written evidence from an engineering expert who specializes in the reconstruction of night time motor vehicle collisions.

The Facts

10The incident occurred on October 4, 2007 at 6 AM., before dawn and under heavy fog. A tractor trailer insured by Kingsway made a left turn at an intersection and while making the turn was struck by a car insured by RSA. The essential facts which describe the collision are set out in more detail in pages 1 and 2 of the arbitration Decision. There are no seriously contested facts and as indicated above, most of the evidence before the arbitrator was in the written agreement of fact.

The Decision of the Arbitrator

11The parties agree that the issues for the Arbitrator to decide are set out and confirmed on page 2 of the decision under the heading “Issues”. The Arbitrator addressed and determined the list of agreed issues.

12The arbitrator noted that Kingsway agreed that RSA was entitled to transfer the loss to Kingsway on any finding of fault against Kingsway’s insured.

13The parties agree the Arbitrator appropriately decided that Rule 12(5) of the Fault Determination Rules did not apply.

14The arbitrator then determined that Rule 14.2 did apply and that the Kingsway insured was 100% at fault.

15In coming to this conclusion, the Arbitrator appropriately considered the plain language meaning of the Rule and also the applicable legal principles. Particularly, the Arbitrator considered the decision of this court in Allstate Insurance Co. of Canada v. CGU Group Canada Ltd. 2001 Carswell Ont. 2624. Specifically, the Arbitrator concluded that Rule 14 could not simply cease to apply once the driver had stopped at the intersection. In the view of the Arbitrator, such an interpretation of Rule 14(2) would be inconsistent with “…the obvious and plain language meaning of Section 14(2)…”.

16Despite having found that Rule 14.2 applied, the Arbitrator went on pursuant to Rule 5 to apply the ordinary rules of law in case he was wrong on this point. Applying the ordinary rules, the Arbitrator determined the Kingsway insured was 100% at fault. RSA agrees with the Arbitrator’s conclusions – while Kingsway submits that the Arbitrator was wrong on this issue.

17In summary, the Arbitrator correctly identified the issues which required adjudication. The Arbitrator turned his mind to the statutory context in which the Rules operate. He considered the related jurisprudence and the plain language meaning of Rules 12.5 and 14.2. Further, the Arbitrator identified and applied the appropriate rules of law.

Outcome

18The parties agree with the Arbitrator’s decision that rule 12(5) does not apply.

19The Arbitrator’s decision concerning the application of Rule 14.2 may or may not be correct, but that is not the test on a standard of reasonableness review. The decision is in all respects, reasonable, supported by the plain language meaning of the Rule and understood in the context of the scheme of Rules in the Regulations. As indicated earlier, the Arbitrator is entitled to deference particularly when interpreting and applying his “home statute”.

20Even if the standard of review on the application of the rules of law is one of correctness, the Arbitrator’s decision met this standard.

21The decision of the Arbitrator falls within the realm of normative and acceptable outcomes.

22The appeal is dismissed.

Costs

23Having regard to the factors set out in Rule 57 which should guide and inform my discretion to award costs. I am particularly aware that any costs ordered should fall within the reasonable expectations of the parties and be proportionate to the circumstances of the dispute. The respondent is entitled to its costs inclusive of taxes and disbursements, of $3,500.00 payable forthwith.