COURT FILE AND PARTIES

COURT FILE NO.: CV-12-470391
DATE: 20131105

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: STATE FARM INSURANCE COMPANIES, Applicant

AND:

CHRISTIAN BUNYAN, Respondent

BEFORE: D.L. Corbett J.

COUNSEL: Mark K. Donaldson, for the Applicant

David J. Levy, for the Respondent

HEARD: October 15, 2013

ENDORSEMENT

[1] On September 21, 2007, Christian Bunyan, a pedestrian, was struck by a truck, on a highway in Alberta. He suffered catastrophic injuries.

[2] Mr Bunyan claimed statutory accident benefits (“SABS”) from his mother’s insurer, State Farm, on the basis that he was a “dependant” of his mother’s at the time of the accident. Mr Bunyan’s mother lived in Ontario and was insured under a policy written in Ontario. State Farm began to pay Mr Bunyan’s SABS claim in December 2007. Subsequently, in 2008, State Farm accepted that Mr Bunyan’s injuries are “catastrophic” for the purpose of SABS benefits.

[3] Now State Farm moves for an order that Mr Bunyan was not insured under his mother’s policy because he was not a “dependant” within the meaning of the policy, and, if it succeeds on this issue, to terminate payment of benefits to Mr Bunyan. State Farm does not seek repayment of benefits paid already.

[4] Both sides contest the “dependant” issue. In addition, Mr Bunyan argues that State Farm is estopped from pursing this issue now. Having paid benefits for the past five years, it would be unfair to permit State Farm to seek to change the status quo: Mr Bunyan is now out of time to pursue claims for SABS against the insurer of the truck that hit him because he relied upon State Farm’s acceptance of his claim.

Summary and Disposition

[5] On balance, I conclude that Mr Bunyan was primarily dependant on his mother at the time of the accident. Mr Bunyan had been trying to become independent, and had recently moved from his mother’s home to do this. However, in all the circumstances, I conclude that he had not yet become independent.

[6] I also conclude that State Farm is estopped from contesting this issue now. It has paid benefits for five years. Mr Bunyan is now out of time to pursue a SABS claim against the insurer of the truck that hit him. Disputes over SABS coverage between insurers are supposed to be resolved by arbitration between insurers in a timely fashion while the injured person receives benefits – benefits they need because of their injuries. Mr Bunyan would be badly prejudiced if State Farm was permitted to deny liability now. The time for that has long passed.

[7] And so, for the reasons that follow, the application is dismissed, with costs payable by State Farm on a partial indemnity basis fixed at $12,000, payable within thirty days.

Issue #1 – Mr Bunyan Was Dependant

[8] It can be difficult to determine precisely when an adult child ceases to be dependant on his parents. Functionally, the change from dependence to independence is more a transition than an event.

[9] Christian Bunyan did not have a smooth transition from dependency to independence. He went through high school but did not secure a diploma. He lived with his mother until the end of high school. In 2004, Mr Bunyan moved to North Bay, lived with his girlfriend, and started a construction company. He and his girlfriend had a child. But this did not last long. In 2005, Bunyan and his girlfriend returned to live with Bunyan’s mother because they were not making ends meet. Later that year, Bunyan and his girlfriend moved to Alberta, where Bunyan hoped to secure work. After about seven months, Bunyan’s girlfriend and son returned to Ontario. Bunyan stayed in Alberta alone, but returned to Ontario in the late summer of 2006 and resumed living with his mother, this time for about a year. In the late summer of 2007, Mr Bunyan went back to Alberta again to find work.

[10] Mr Bunyan set out to drive to Alberta from Ontario. He bought a second-hand car. But he could not afford the insurance and did not have a valid driver’s license. Police stopped him in northern Ontario, and after that he hitchhiked. It is not clear what became of his car.

[11] At the time of the accident, Mr Bunyan had $0.24 in his bank account. He had found work within the previous three weeks. He was covering his day-to-day expenses with money from his mother. With his wages it seems that he was mostly buying alcohol and cigarettes.

[12] Apparently alcohol was a problem for Mr Bunyan. On the night of the accident, Mr Bunyan got into an altercation with other passengers while on a bus. He was put off the bus. Shortly after, he was struck by the truck on the dark highway where he had been left. Alcohol appears to have been a factor in these events.

[13] I accept that Mr Bunyan went to Alberta to find work, to establish himself, to become independant. We will never know if he would have succeeded this time. Perhaps he would have. But on balance I do not believe so. On a functional basis, at the time of the accident, Mr Bunyan was meeting his expenses with money from his mother. He had a serious alcohol problem which was apparently untreated, and which seemed likely to interfere with his ability to hold down a job. Based on his history, I expect that Mr Bunyan would have continued to move from job to job, at times making ends meet, at others not, and would have returned to his mother’s home when he found himself unable to make a “go” of it on his own. I expect that this would have continued until his mother refused to help any more or he obtained help with his issues with alcohol.

(a) Law

[14] For Mr Bunyan to be insured under his mother’s policy, he has to meet the definition of “insured person”, which means “the named insured, any person specified in the policy as a driver of the insured automobile, the spouse of the named insured, and any dependant of the named insured or spouse, if the named insured, specified driver, spouse or dependant, is involved in an accident in or outside Ontario that involves the insured automobile or another automobile.”[^1]

[15] A person is “dependant” on another, in this context, if that person is “principally dependant for financial support or care on the other person or the person’s spouse”.[^2]

[16] Although developed under prior iterations of this legislation, “dependency” continues to be assessed through the lens of the following criteria:

(i) amount of dependency;

(ii) duration of dependency;

(iii) financial or other needs of the alleged dependant; and

(iv) the ability of the alleged dependant to be self-supporting.[^3]

[17] The analysis of “dependence” is a practical and functional one. The individual’s ability to be self-supporting is assessed, and not just his earnings.[^4] And support in the form of “money’s worth”, and not just “money” is taken into account. Thus, in this case, I note that Mr Bunyan held down two jobs in Ontario in the 2006-2007 period. His earnings were lower than they ought to have been because one of his employers failed to pay his wages. Mr Bunyan’s mother and grandmother provided significant money’s worth for Mr Bunyan during that year: free room and board. We do not really know what Mr Bunyan did with his earnings, but it seems that most of them went into alcohol, cigarettes, perhaps drugs, and other items of personal amusement, and perhaps some savings towards the car he bought before leaving for Alberta.

[18] This is not a case where Mr Bunyan had a clear trajectory. Some of the dependency cases show claimants with an unbroken record of progress towards independence. The issue in those cases is whether, given their progress, they did or did not remain dependant by the time of the accident. Here, Mr Bunyan went through periods when he was independent (his time in North Bay, working in his own company, and living with his girlfriend), and others when he was dependant again (such as the year immediately before he went back out to Alberta).

[19] Some of the cases emphasize the extent of financial contribution. “Principally dependant” has been taken, in some of them, to refer to meeting more than 50% of the costs of living, whether in money or money’s worth. I consider relative financial contribution to be an important factor, but not the only consideration. And this is not a moralistic analysis based on whether a young person “should” or “should not” have achieved independence. Here the question is not whether the young person “should” be independent, but whether, in fact, he is so.

[20] In this case, given Mr Bunyan’s inconsistent progress to independence, I do not confine my analysis to the few weeks he was back in Alberta. If the prior twelve month period is analysed, it is clear he was seeking to become self-supporting, but that more than half of his day-to-day expenses were being met by his mother in the form of accommodation and food. I find that in the few weeks he was working in Alberta, Mr Bunyan had not established his independence. He had not found permanent accommodation. He had not obtained personal transportation. He had not established that he could keep steady employment. He had not paid his outstanding or ongoing child support obligations (even though these were based on his lower Ontario income). He had accumulated no savings. And he continued to require money from his mother to feed himself.

[21] I also find that Mr Bunyan’s issues with alcohol contributed to his continuing dependence. He may have continued as he was for weeks or even months, but in the absence of a solution to his underlying issues, I find that he would not have been able to sustain employment, pay his bills, and achieve independence. He would have been back in his mother’s house, regrouping again.

[22] For these reasons I conclude that Mr Bunyan was still principally dependant financially on his mother at the time that he was injured. He was thus an insured person under his mother’s insurance policy held from State Farm.

State Farm’s Claim Barred by Estoppel

[23] The estoppel argument involves the law of three jurisdictions. The accident happened in Alberta and is governed by Alberta law. The State Farm policy was written in Ontario and is governed by Ontario law. The vehicle that struck Mr Bunyan was licensed and insured in Manitoba.

[24] Ontario law contains a code for dealing with disputes as to which insurer will be responsible to pay SABS. Section 2 of the applicable regulation provides:

The first insurer that receives a completed application for accident benefits is responsible for paying benefits to an insured person pending the resolution of any dispute as to which insurer is required to pay benefits under section 268 of the Insurance Act.[^5]

[25] The “first insurer” must move forward promptly if it wishes to claim that another insurer should be “required to pay” the SABS:

No insurer may dispute its obligation to pay benefits under s.268 of the Act unless it gave written notice within 90 days of receipt of a completed application for benefits to the insurer… who it claims is required to pay under Regulation 283/95 of the Insurance Act.[^6]

[26] There is some flexibility in this 90 day deadline. An insurer can give notice to another insurer more than 90 days after receipt of a completed application for benefits, but only if:

(a) 90 days was not a sufficient period of time to make a determination that another insurer… is liable…; and

(b) The insurer made the reasonable investigation necessary to determine is another insurer was liable within the 90 day period.[^7]

[27] A dispute as to “whether an insurer who has not given notice within 90 days has complied with subsection (2) shall be resolved in an arbitration under section 7 [of the Regulation].”[^8]

[28] Section 4 of the Regulation provides that “[a]n insurer that gives notice under section 3 shall also give notice to the insured person using a form approved by the Superintendant.”[^9]

[29] The insured person is then required to respond within 14 days of receiving notice if he objects to the transfer of the claim to the insurer named in the notice.[^10]

[30] Under Ontario’s Insurance Act, Mr Bunyan was a “non-occupant” for the purposes of determining his recourse for insurance benefits arising from the accident. “Non-occupant” here means a person who was not an occupant of a vehicle. Paragraph 2 of subsection 268(2) provides that:

(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.[^11]

[31] Under subsection 268(3) of the Act, “[a]n insurer against whom a person has recourse for the payment of statutory accident benefits is liable to pay the benefits”.[^12]

[32] Mr Bunyan’s completed application for SABS was provided to State Farm around December 19, 2007. State Farm was aware that the truck that struck Mr Bunyan was insured by Manitoba Public Insurance Corporation (“MPIC”).

[33] Under the Ontario legislation, State Farm was obliged to pay Mr Bunyan’s benefits until a priority dispute between it and MPIC was determined through the arbitration process.

[34] I was advised at the return of the motion that State Farm did give notice to MPIC, but received a response that MPIC was not subject to Ontario legislation, and thus could not be compelled to arbitrate over liability under the Ontario Insurance Act and Regulation.

[35] I was not provided particulars of the process that could have been invoked to determine a priority dispute between State Farm and MPIC. Nor was I advised that Ontario’s Insurance Act provides some alternative process for resolution of such a dispute other than under the terms of the Ontario Insurance Act and the Regulation.

[36] As noted above, if Mr Bunyan was a dependant, then he applied for SABS from the priority insurer. If not, then he had recourse against MPIC as the insurer of the truck that struck him.

[37] The Supreme Court of Canada has established the following test for estoppel by convention:

1. The parties’ dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly).

2. A party must have conducted itself, i.e. acted, in reliance on such a shared assumption, its actions resulting in a change of its legal position.

3. It must also be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position.[^13]

[38] Here, the “shared assumption” concerns the process pursued by State Farm. In simple terms, if State Farm wished to pursue a position, as against Mr Bunyan, that it was not liable because he was not a dependant, it was incumbent on State Farm to do so while it was still open to Mr Bunyan to pursue a claim for SABS against MPIC. It is not sufficient that State Farm took this position, as against MPIC. Nor is this made sufficient because Mr Bunyan knew that this was State Farm’s position as against MPIC. Under the legislation, State Farm was obligated to pay pending resolution of the priority dispute between itself and MPIC. Mr Bunyan was entitled to take no position as between the two insurers. He was entitled to participate in the fact-finding process, as between the two insurers, and “let the chips fall where they may”. In the absence of a clear indication from State Farm that it would take the position, with him, that it should not be required to pay, even if MPIC did not have to pay, there was no reason for Mr Bunyan to take steps against MPIC.

[39] So, the shared assumption, manifest by State Farm’s payment of benefits for many years, was that State Farm would not take a position against Mr Bunyan on the dependence issue outside a priority dispute between itself and MPIC. Mr Bunyan changed his legal position by not pursuing a claim against MPIC for SABS in reliance on the shared assumption. It would be unjust to permit State Farm to resile from that shared assumption now.

Order

[40] The application is dismissed. State Farm shall pay Mr Bunyan’s partial indemnity costs fixed at $12,000 inclusive, payable within thirty days.

D.L. Corbett J.

Date: November 5, 2013

Footnotes

[^1]: Statutory Accident Benefits Schedule, O. Reg. 403/96, s.2(1).

[^2]: Statutory Accident Benefits Schedule, O. Reg. 403/96, s.2(6).

[^3]: Miller v. Safeco (1985), 1984 2019 (ON SC); aff’d (1986), 1985 2022 (ON CA).

[^4]: Federation Insurance Company v. Liberty Mutual – Award of Arbitrator Samis dated May 7, 1999.

[^5]: Disputes Between Insurers, O. Reg. 283/95, s.2, made under the Insurance Act, R.S.O. 1990, c. I.8.

[^6]: Ibid., s.3(1).

[^7]: Ibid., s.3(2).

[^8]: Ibid., s.3(3).

[^9]: Ibid., s.4.

[^10]: Ibid., s.5(1).

[^11]: Insurance Act, s.268(2).

[^12]: Ibid., s.268(3).

[^13]: Ibid., para. 59.