BARRIE COURT FILE NO.: CV-12-1379

DATE: 20131105

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

INTACT INSURANCE COMPANY

Applicant/Appellant

– and –

FEDERATED INSURANCE COMPANY OF CANADA, OLD REPUBLIC INSURANCE COMPANY OF CANADA and HER MAJESTY THE QUEEN THE MOTOR VEHICLE ACCIDENT CLAIMS FUND

Respondents

Deborah G. Neilson, for the Applicant/Appellant

Mark K. Donaldson, for the Respondent Federated Insurance Company of Canada

HEARD: October 16, 2013

REASONS FOR DECISION

DiTOMASO J.

THE PROCEEDINGS

[1] This is an appeal by way of Application and Appeal from the decision of Arbitrator Kenneth J. Bialkowski dated November 15, 2012. In the Application and Appeal, the Applicant Intact Insurance Company (“Intact”) seeks similar relief. In the Notice of Application, Intact seeks an order setting aside the order of Arbitrator Bialkowski dismissing the Arbitration against Federated Insurance Company of Canada (“Federated”). In the Notice of Appeal, Intact seeks the same relief as well as a declaration that Intact provided timely notice to Federated under s.3(1) and s.3(2) of O. Reg. 283/95 pursuant to the Insurance Act R.S.O., 1990, cI.8. The Arbitration Agreement between the parties permits a party to appeal the Arbitrator’s decision to a Judge of the Superior Court of Justice on errors of law and mixed fact and law. As a result, the appeal came before this court.

OVERVIEW

[2] The claimant Kalob Cadieux (“Kalob”) was injured while a passenger in a motor vehicle operated by his father Patrick Cadieux. Intact takes the position that Patrick Cadieux’s policy of motor vehicle liability insurance had been cancelled for five days before the loss.

[3] At the time of the accident, Kalob’s parents were no longer living together. Kalob primarily resided with his mother Lucie Cadieux (“Lucie”). Lucie’s parents had provided Lucie with a vehicle to use (“the Courtemanche vehicle”). The Courtemanche vehicle was also insured by Intact.

[4] Following the accident, an Application for Accident Benefits was submitted on behalf of Kalob to Intact.

[5] Intact subsequently sent out Notices to Applicant of Dispute Between Insurers forms to the Respondents. A dispute arose as to which insurer, if any, ought to respond to Kalob’s Application for Accident Benefits.

[6] Federated submits that Intact’s notice to it of the intercompany priority dispute was sent beyond the 90 day period provided in s.3(1) of Ontario Regulation 283/95. Intact had also served the Respondents Old Republic Insurance Company of Canada (“Old Republic”) and the Motor Vehicle Accident Claims Fund (“the Fund”) with the Notice of Dispute. There was no issue that Intact served both Old Republic and the Fund with the Notice of Dispute in time. Both Old Republic and the Fund served Federated with a Notice of Dispute as well.

[7] The parties agreed to the appointment of the Arbitrator. The arbitration was conducted based upon oral argument, Written Submissions, Books of Authority and a Joint Document Brief.

[8] The Arbitrator released his decision on November 15, 2012 and concluded that Intact did not provide Federated with notice of this intercompany priority dispute within 90 days of Intact’s receipt of a completed Application for Accident Benefits. Further, as Intact did not meet the test for relief from the 90 notice period, the arbitration proceeding was dismissed as against Federated with regard to the claimant Kalob Cadieux only. Intact now seeks to have the Arbitrator’s decision overturned on this appeal.

BACKGROUND FACTS

[9] The factual background is largely not in dispute. The intercompany dispute presented to Arbitrator Bialkowski arose out of a motor vehicle accident of April 25, 2010 in which Kalob was injured. At the time he was approximately five years old (born September 14, 2005) and he was a passenger in a van owned and driven by his father Patrick. The other vehicle involved in the accident was a transport truck owned by Kenworth Toronto Leasing and was rented to United Petroleum Transport Ltd.

[10] Two Applications for Accident Benefits, both on the OCF-1 Form were prepared with respect to Kalob. The first such Application was dated April 25, 2010. That OCF-1 was sent by fax by Kalob’s solicitor, David Hollingsworth, to Intact on June 3, 2010. If it was received that afternoon, it would have been deemed received on June 4, 2010. This OCF-1 Application was signed by Mr. Hollingsworth, who was listed as the Substitute Decision Maker.

[11] The April 25 OCF-1 Application did not indicate the following information in respect of Kalob:

(a) his address;

(b) phone number;

(c) whether anyone was dependent upon him for financial support;

(d) how he may be reached;

(e) date of birth;

(f) investigating officer’s name;

(g) investigating officer’s badge number;

(h) time of accident;

(i) if he was charged;

(j) the name of his school;

(k) the date he last attended school;

(l) the program and level of school; and

(m) whether he has any other benefit plan.

[12] Part 2 of the April 25^th^ OCF-1 Application indicated the claimant was represented by lawyer David Hollingsworth and provided his address. Page 2 of this Application stated that Kalob Cadieux was a listed driver. Part 4 of this Application stated the claim was made under a policy that lists Kalob as a driver and stated the policyholder was Lise Courtemanche (his grandmother), the insurance company is Intact and provided a policy number of 40797971.

[13] No authorization from Kalob Cadieux was provided with the April 25^th^ OCF-1 Application for Intact to disclose information to David Hollingsworth.

[14] The second Application for Accident Benefits, also on the OCF-1 Form is dated May 17, 2010. The second Application for Accident Benefits was sent by Mr. Hollingsworth under cover of letter dated June 7, 2010, received by Intact on or about that date. It appears that the June 7, 2010 correspondence package came directly to Intact in Ottawa and was assigned to Monique Quintal, a Senior Accident Benefits Claims Representative with Intact. The only difference between the April 25^th^ OCF-1 and the May 17^th^ OCF-1 Application is the name and signature of the Substitute Decision Maker.

[15] On June 7, 2010, Monique Quintal phoned Mr. Hollingsworth, with whom she had dealt previously, advising his office that she needed a direction from him to discuss the file with him. As a result, on June 7, 2010, Intact received a Direction signed by Lucie Cadieux authorizing Intact to disclose to David Hollingsworth documents or information pertaining to Lucie Cadieux and Kalob Cadieux (“the Direction”). The May 17^th^ OCF-1 Application was sent to Intact under cover of a letter from Mr. Hollingsworth dated June 7, 2010.

[16] Ms. Quintal spoke with Mr. Hollingsworth again on June 7, 2010 and advised him Intact might need a Statement. He said that securing a Statement would not be a problem. He also explained that Kalob’s parents were divorced and his mother did not want the father finding out her address as there were concerns he would assault her.

[17] On June 10, 2010 Ms. Quintal prepared a File Summary and also pursued certain inquiries.

[18] On or about June 10, 201, Ms. Quintal conducted searches on Intact’s HALCION system trying to find out the relationship between Cadieux and Courtemanche because the Application for Accident Benefits that was submitted had a policy under the name of Courtemanche, but the name of the claimant was Cadieux. Ms. Quintal did not know what the relation was between the two of them and could not determine the relationship from her search.

[19] On June 10, 2010, Ms. Quintal phoned Kalob’s case manager, Marg Stephenson, and was advised at that time that Lise Courtemanche was the mother of Lucie Cadieux, who was the mother of Kalob Cadieux. Lucie and Kalob had been in a safe house and were being followed by a victim’s rights program. Although Lucie Cadieux had legal custody of Kalob, custody was being challenged in the court on June 29, 2010.

[20] On June 10, 2010, Ms. Quintal called Lucie Cadieux’s broker who advised that Lucie Cadieux’s husband, Patrick Cadieux had a policy of motor vehicle liability insurance with Intact policy number 7-19433055 that was cancelled for non-payment on April 20, 2010.

[21] On June 10, 2010, Ms. Quintal phoned Brokerlink, the Courtemanche’s broker, to determine if Lucie, the mother of Kalob, was a listed driver on the Courtemanche policy. Brokerlink confirmed Lucie Cadieux was not a listed driver under the Courtemanche policy.

[22] On June 10, 2010 Ms. Quintal had performed her own internal searches as to the potential relationship between Kalob and Intact’s insured’s Courtemanche.

[23] During Ms. Quintal’s inquiries on June 10, 2010, Intact’s Broker advised her that Patrick Cadieux’s policy was cancelled for non-payment five days before the accident. Also, her inquiries confirmed that Lucie Cadieux was not listed on the Courtemanche policy.

[24] Ms. Quintal identified some outstanding tasks such as securing a statement from Kalob’s mother, investigating priority, taking a statement from Kalob’s father, securing third party information to cover off a potential loss of transfer claim, as well as investigating alternative coverage for Kalob’s father.

[25] On June 14, 2010, Ms. Quintal assigned an independent adjuster to secure the signed statement from Lucie Cadieux and also to obtain a copy of the police report, if available from Mr. Hollingsworth.

[26] On June 15, 2010, Ms. Quintal wrote to Mr. Hollingsworth and Kalob care of his mother providing an Application for Accident Benefits available, a blank authorization for signature to allow Intact to obtain a copy of the police report and various consents for medical information. The Application was provided, even though a partial Application had already been sent to Intact, because the legislation requires insurers to provide information to claimants as to the benefits available. Intact never received the June 15^th^, 2010 OCF-1 Application back.

[27] On June 22, 2010, Mr. Hollingsworth wrote to Intact confirming receipt of Ms. Quintal’s June 15, 2010 letter and advised that his law firm would obtain the information she requested and would forward it to Intact.

[28] Intact’s road adjuster, Jennifer Vaux, phoned Mr. Hollingsworth’s office on June 25, July 19, and July 30, 2010 in order to schedule a time to obtain a statement from Lucie Cadieux. She left messages for Mr. Hollingsworth each time to phone her back.

[29] Fern Jackson, a BI/tort adjuster with Intact, requested the police report from the Ottawa City Police Services on or about June 30, 2010.

[30] As Intact had been trying unsuccessfully to obtain a statement from Lucie Cadieux, on August 3, 2010, Ms. Quintal wrote to the claimant care of his mother with a copy to Mr. Hollingsworth and advised that she had received an incomplete accident benefit OCF-1 Application on June 4, 2010. She enclosed the incomplete OCF-1 Application and asked for it to be completed and returned to Intact as soon as possible. She also advised that Intact was in the process of arranging a statement, and that the information required by Intact to process the claimant’s accident benefit claim could perhaps be obtained then.

[31] The OCF-1 Application that was returned to the claimant on August 3, 2010 for completion was never resubmitted to Intact.

[32] Ms. Vaux did not receive any phone calls in response to her messages to Mr. Hollingsworth. Therefore, on August 3, 2010, she sent Mr. Hollingsworth an email to which he replied the same day.

[33] Lucie Cadieux was not available until after regular business hours to provide a statement. Ms. Vaux was unable to obtain a statement after regular business hours. Therefore, a decision was made on August 6, 2010 by Intact to retain an independent adjuster to take Lucie Cadieux’s statement.

[34] Anne Herriotts of ClaimsPro Inc. was retained by Intact to obtain a statement from Lucie Cadieux. Ms. Herriotts confirmed the retainer on August 10, 2010.

[35] Ms. Herriotts reported that she had difficulty scheduling a time to obtain the statement due to a lack of response from Mr. Hollingsworth. However, on or about August 16, 2010 she arranged to meet with Lucie Cadieux and her lawyer on August 20, 2010 to take a statement.

[36] Intact received a report from Ms. Herriotts via e-mail on August 24, 2010. On August 26, 2010, Ms Quintal asked Ms. Herriotts about Lucie Cadieux’s statement. Ms. Herriotts advised that the statement had been sent by mail, but she could scan a copy and send it by e-mail. However, the August 20, 2010 statement of Lucie Cadieux was not received by Intact until September 2, 2010.

[37] Ms. Herriotts reported to Intact on August 24, 2010, that she ended up in a debate with the claimant’s counsel over the relevance of obtaining the police report. She was unable to obtain a copy of the report from Mr. Hollingsworth.

[38] On September 2, 2010, after reviewing Lucie Cadieux’s August 24, 2010 statement, Ms. Quintal realized that Mr. Hollingsworth had a copy of the police report. The police report had been released to him by the Ottawa Police Services on August 5, 2010. Accordingly, via e-mail sent on September 2, 2010, Ms. Quintal asked Mr. Hollingsworth for a copy of the police report.

[39] On September 2, 2010, before receiving a copy of the motor vehicle accident report, Ms. Quintal faxed a notice of dispute to the Fund and to Lucie Cadieux care of Mr. Hollingsworth with a letter explaining priority and advising that Intact would continue to handle Kalob’s claim until such time as the Fund accepted the claim.

[40] Ms. Quintal received a copy of the police report dated April 25, 2010 from Mr. Hollingsworth on September 2, 2010. Intact never received a copy of the police report directly from the Ottawa Police Services pursuant to Fern Jackson’s request made on or about June 30, 2010.

[41] On September 2, 2010, Intact wrote to the claimant care of Mr. Hollingsworth confirming a statement had been obtained and stated that the Application for Accident Benefits had sections that were not completed. However, due to the circumstances surrounding the family dynamics, Intact accepted the Application for Accident Benefits as completed.

[42] Intact did not obtain a statement from Patrick Cadieux or assign an independent adjuster to obtain a statement from Patrick Cadieux because Intact did not have any information on him. Intact was unable to conduct an MVR on him as the underwriting department believed he had a British Columbia driver’s licence.

[43] Ms. Quintal issued the first Notice to Applicant of Dispute Between Insurers form on September 2, 2010. This Notice was sent to the Fund.

[44] The time Intact sent their Notice to the Fund was before Ms. Quintal had reviewed the police report.

[45] On September 3, 2010, Ms. Quintal sent a second Notice to Applicant of a Dispute Between Insurers form both to the Fund and Old Republic. Old Republic was shown as the insurer of the other vehicle involved in the April 25, 2010 accident on the police report.

[46] Ms. Quintal next received a letter dated September 8, 2010 from Paccar Leasing Company advising that the truck involved was a rental and that vehicle was insured by Federated.

[47] On September 13, 2010, Ms. Quintal prepared a third Notice to Applicant of Dispute Between Insurers form and directed same to the Fund and to Federated.

[48] Ms. Quintal did not subsequently send out any other Notices of Dispute to any other insurers. Both Old Republic and the Fund sent Notices of a Priority Dispute to Federated with respect to the claim of Kalob.

[49] Ms. Quintal has had file-handling responsibility for this claim from the outset and has remained the principal file handler throughout.

[50] Intact, Federated, the Fund and Old Republic have all agreed that the Arbitrator’s decision is binding upon the parties, but that any party may appeal the Arbitrator’s decision on a point of law or on a point of mixed fact and law to a Judge of the (Ontario) Superior Court of Justice, without leave of the Court

[51] As the preliminary issue was only between Intact and Federated with respect to Kalob’s Application for Accident Benefits, the Fund and Old Republic were not required to attend the arbitration and did not do so.

[52] The Arbitrator dismissed the arbitration with respect to payment of Kalob’s accident benefits without hearing any submissions or evidence from the Fund or Old Republic and declined to correct his decision when requested to do so by Intact.

[53] The Arbitrator did not provide reasons why the arbitration of the Fund and Old Republic’s priority dispute against Federated regarding Kalob was dismissed.

[54] The Arbitrator determined that Intact received a “completed application” at the very latest on June 7, 2010, despite the fact that Intact did not have a badge number or name for the officer who investigated the motor vehicle accident.

[55] The Arbitrator found that Intact, with reasonable investigation, would have had a police report and a statement from Kalob’s mother at a much earlier date enabling it to determine insurance details on the Federated-insured transport truck involved in the collision.

ISSUES

Issue #1 – What is the appropriate standard of review to apply in reviewing the decision of the Arbitrator dated November 15, 2012?

Issue #2 – Did the reasoning employed and the conclusion reached by the Arbitrator in his decision dated November 15, 2012 amount to an error of law or of mixed fact and law, and if so, should the Arbitrator’s decision be set aside?

[56] In considering issue #2, there are three sub-issues:

(a) Whether the Arbitrator failed to decide correctly the meaning of a “completed application”?;

(b) Whether the Arbitrator erred in finding 90 days was sufficient time for Intact to make a determination that other insurers were liable?;

(c) Whether the Arbitrator erred in finding Intact did not make the reasonable investigations necessary to determine if another insurer was liable within the 90 day period and?; and,

(d) Whether the Order of the Arbitrator dismissing the arbitration against Federated be set aside?

ANALYSIS

Issue #1 – What is the appropriate standard of review to apply in reviewing the decision of the Arbitrator dated November 15, 2012?

[57] The Arbitration Agreement between the parties provided that the Arbitrator’s decision was binding upon the parties but that any party may appeal the arbitrator’s decision on a point of law or on a point of mixed fact and law to a judge of the (Ontario) Superior Court of Justice, without leave of the Court.

[58] Intact submits that the standard of review where there is an appeal as of right is correctness.[^1]

[59] Federated submits that the appropriate standard of review in an appeal from a private priority arbitration decision is correctness in relation to questions of law and reasonableness in relation to questions of mixed fact and law.[^2]

[60] The Ontario Court of Appeal in Oxford Mutual v. Co-operators ruled that an Arbitrator deciding a priority dispute between two insurers in an Accident Benefits claim was entitled to deference in respect of his findings. The Court noted that, when determining a dependency issue, the question before the Arbitrator was one of mixed fact and law and was closer to a factual determination. Given the special expertise of Arbitrators in evaluating facts for a determination of dependency for Statutory Accident Benefits entitlement, unless the Arbitrator’s decision was unreasonable, it was entitled to deference.[^3]

[61] In Zurich Insurance v. Personal Insurance Co. supra, Brown J. reviewed the caselaw regarding the standard of review in private arbitration matters under the Insurance Act including the Court of Appeal’s decision in Oxford Mutual and concluded that the appropriate standard of review in these types of cases is correctness in relation to questions of law and reasonableness in relation to questions of mixed fact and law. I adopt the reasoning of Brown J. in Zurich Insurance to come to the same conclusion.

[62] In Ontario (Minister of Finance) v. Lombard Insurance, Perell J. also came to the same conclusion. I adopt his reasoning as well.

[63] I find that the appropriate standard of review in an appeal from a private priority arbitration decision is correctness in relation to questions of law, and reasonableness in relation to questions of mixed fact and law.

Issue #2 – Did the reasoning employed and the conclusion reached by the Arbitrator in his decision dated November 15, 2012 amount to an error of law or of mixed fact and law, and if so, should the Arbitrator’s decision be set aside?

[64] I come now to the second issue and consider the first sub-issue.

A. Whether the Arbitrator failed to decide correctly the meaning of a “completed application”?

Decision of the Arbitrator

[65] The Arbitrator delivered copies of two preliminary issue decisions. Both copies are dated December 15, 2012. The first copy was delivered under correspondence dated November 15, 2012. The second copy was delivered under copy of correspondence dated December 19, 2012. The only change as between the two decisions can be found in the Arbitrator’s order at para. 1. He modified his order to dismiss the arbitration as against Federated with respect to the claim of Kalob Cadieux only.

[66] The facts in respect of the priority dispute were not in issue. He had before him written submissions from both parties as well as a joint document brief. He was totally conversant with the factual matters surrounding the nature of the priority dispute. At issue was whether Intact’s notice to Federated of the intercompany priority dispute was sent beyond the 90 day period provided in s.3(1) of Ontario Regulation 283/95 made under the Insurance Act, R.S.O. 1990, c.I.8. He cited the relevant legislation in his decision and he referenced the factual background giving rise to the dispute. He set out the relevant facts in four pages of his decision. He went on to set out analysis and findings. In order to decide the preliminary issue before him, the Arbitrator considered the exact same issues raised on this appeal by Intact (save for the appropriate standard of review issue).[^4]

[67] The Arbitrator considered s.3(1) of Ontario Regulation 283/95 together with the Ontario Court of Appeal decision in Ontario (Minister of Finance) v. Pilot Insurance Company (2012), CarswellOnt. 954, 2012 ONCA 33, [2012] I.L.R. I-5239, 109 O.R. (3d) 168, 212 ACWS (3d) 1039 at pp. 8-9, para. 42. In the Pilot Insurance case, the Court of Appeal dealt with the issue of what constitutes a “completed application”. Having reviewed the caselaw, the Arbitrator went on to a careful review and analysis of the available evidence. He concluded that Intact received a “completed application” at the very latest on June 7, 2010. On that date, Intact had an authorization executed by the claimant’s mother allowing the solicitor of the claimant to release and disclose documentation and information in his possession to Intact. On that date, Intact had sufficient information from the Application itself and the covering letter from the claimant’s counsel to obtain a police report or meet with Ottawa police to determine the owner and insurer of the transport truck involved in the collision. The Arbitrator found that Intact knew the location in Ottawa of the collision, the name of one of the operators, the date of the collision and the fact that it was investigated by Ottawa police. Since the June 7, 2010 covering letter from claimant’s counsel indicated that the Cadieux vehicle was uninsured, the Arbitrator found that Intact ought to have immediately realized that it needed ownership and insurance details of the transport third party vehicle within 90 days. He found that Ms. Quintal’s file and summary of June 10, 2010 clearly identified that priority was an issue and that a police report was to be obtained. According to the Arbitrator’s calculations, having received a “completed application” on June 7, 2010, Intact had until September 5, 2010 to put other insurers on notice that it believed stood in priority. Notice was not sent to Federated until September 13, 2010. The Arbitrator found that Intact did not meet the 90 day notice requirement as set out in Ontario Regulation 283/95.

POSITIONS OF THE PARTIES

Position of Intact

[68] Intact submits that it never received a genuinely complete Application for Accident Benefits and that it was not until Intact obtained a statement from Kalob’s mother regarding Kalob’s custody that Intact had a functionally complete Application for Accident Benefits.

[69] Intact submits that the Arbitrator did not appreciate the test for determining whether an Application for Accident Benefits is functionally complete for the purpose of section 3 of Ontario Regulation 283/95, i.e. whether the Application itself in the accompanying documentation contains the information to allow an insurer to identify the other priority insurer. Intact submits that the Arbitrator erred in law in that he misinterpreted the functionally adequate test to mean that if the insurer can obtain the information missing from the Application for Accident Benefits through intensive and rigorous investigation, the Application is complete. Further, Intact submitted that a correctly completed OCF-1 Application would have provided adequate information for Intact to give Old Republic notice and thereby start the running of the 90 day time limit. The Application was not functionally complete for the purposes of section 3 of the Regulation.

[70] Notwithstanding Intact not having the badge number of the officer who investigated the accident, the Arbitrator determined that the Application was functionally complete on the basis Intact could have attended at an Ottawa Police Station and ask if the police would disclose the names of the insurance companies who insured the vehicles involved in the motor vehicle accident.

[71] Further, it was submitted that there was no evidence before the Arbitrator that if Intact had attended at a police station with a date, time and location of an accident, an adjuster would be provided with the investigating officer’s name, badge or if that information was provided, that the investigating officer would disclose the names of the parties involved in the accident, their insurers and the policy numbers of the insurance on the vehicles. There was no evidence before the Arbitrator of the procedure for obtaining a Motor Vehicle Accident Report on an expedited basis that does not require the name and badge number of the investigating officer. Intact submitted that the Arbitrator’s finding that Intact had a functionally complete Application for Accident Benefits by June 7, 2010, was an error of fact and law and ought to be set aside. In its place, Intact seeks a finding that it did not receive a completed Application at the earliest until September 2, 2010.

Position of Federated

[72] Federated submits that the Arbitrator was correct in his finding that Intact had a completed Application as of June 7, 2010. He was correct in his calculations that Intact had not served Federated with a notice until September 13 beyond the 90 day statutory requirement. It is submitted that the Arbitrator had before him the appropriate caselaw and factual matrix on which to make his findings. He considered the evidence of Ms. Quintal and noted what she did and the things she had set out to be done.

[73] On behalf of Federated it is submitted that Intact knew when the Application to Intact was received on June 7, 2010 that the Patrick Cadieux policy was cancelled for non-payment five days before the accident. Intact knew from the very outset that it would take an off-coverage position. One of the noted items to be addressed was obtaining a statement from the father which was never done.

[74] The Arbitrator was critical of the time that had elapsed in Intact obtaining mother’s statement and critical regarding time elapsed to obtain a copy of the police report. Federated submits that Intact was well aware of its off-coverage position and should have investigated immediately other vehicles involved in the accident. In particular, Intact needed ownership and insurance details on the transport third party vehicle within 90 days. Ms. Quintal’s file summary of June 10, 2010 clearly identified that priority was an issue and that a police report was to be obtained.

[75] Unfortunately for Intact, it is submitted that Intact wasted too many days during the critical 90 day period by not taking adequate and timely steps to identify insurance details on the transport truck.

[76] It is submitted that the Arbitrator was sensitive to the importance of obtaining a police report and how this would affect notice during the 90 day period, in particular, notice to Federated. It is submitted that the delay in obtaining Lucie Cadieux’s statement and the lack of follow-up obtaining the police report were fatal to Intact. Accordingly, Federated submits that the Arbitrator was correct in finding that Intact did not meet the 90 day notice requirement as set out in Ontario Regulation 283/95.

ANALYSIS

[77] I find that the Arbitrator was correct in arriving at his finding that Intact did not meet the 90 day notice requirement as set out in Ontario Regulation 283/95 for the following reasons.

[78] The Arbitrator considered s.3(1) of O.Reg.283/95 which provides:

Section 3(1) – No insurer may dispute its obligation to pay benefits under section 268 of the Act unless it gives written notice within 90 days of receipt of a completed application for benefits to every insurer who it claims is required to pay under that section.

[79] Intact submits that a completed application is one that is: (a) genuinely complete; (b) functionally adequate for its legislative purpose; or (c) treated as complete based on the conduct of the first insurer.[^5]

[80] Intact submits that there is a difference between functionally adequate for the purposes of section 2 of the Regulation than for the purposes of section 3 of the same Regulation. To be functionally adequate for the purpose of section 2 – and thus trigger the first insurer’s obligation to pay benefits to the injured person – an Application must contain sufficient information to allow the insurer to assess and process the injured person’s claim for benefits. To be functionally adequate for the purposes of section 3 – and thus trigger the 90 day period an insurer has to notify another insurer that it is disputing its obligation to pay benefits – an Application must contain sufficient information to allow the first insurer to give notice of dispute to another insurer.[^6] It is argued that one should interpret the commencement of the days as having commenced with the receipt of the OCF-1 Application in circumstances where that form has been completed and has been required by the insurer. As soon as the insurer has sufficient information to notify another insurer that is disputing liability to pay the benefits, the 90 day notice period starts running.

[81] I find that the Arbitrator was fully aware of what constituted a “complete application” and was fully aware of the difference between functionally adequate for the purposes of section 2 as opposed to the purposes of section 3 of Ontario Regulation 283/95.

[82] His analysis came down to analyzing the evidence available and he rightly concluded on the evidence available to him that at the very latest on June 7, 2010 Intact received a “completed application”. He did not misapprehend the test to be applied and did not deem the Application complete based on the conduct of Intact. Rather, he did find that the Application was a “completed application” at the very latest on June 7, 2010 because at that time Intact had in its possession an authorization executed by Lucie Cadieux allowing Mr. Hollingsworth to release and disclose documentation and information in his possession to Intact. On June 7, 2010, Intact had sufficient information from the Application itself and the covering letter from Mr. Hollingsworth to obtain a police report or meet with Ottawa police to determine the owner and insurer of the transport truck involved in the collision. The Arbitrator was correct when he found that Intact as of June 7, 2010 knew the location in Ottawa of the collision, the name of one of the operators, the date of the collision and the fact that it was investigated by the Ottawa Police Service. Since the June 7, 2010 covering letter from Mr. Hollingsworth indicated that the Cadieux vehicle was uninsured, the Arbitrator found that Intact ought to have immediately realized that it needed ownership and insurance details on the transport third party vehicle within 90 days. The Arbitrator was correct in his appreciation that the critical time period was counting down from June 7, 2010.

[83] The Arbitrator went on to find that Ms. Quintal’s file summary of June 10, 2010 clearly identified that priority was an issue and that a police report was to be obtained. That police report was not obtained until September 2, 2010. While the Fund and Old Republic were put on notice in time, notice was not sent to Federated until September 13, 2010 – out of time.

[84] I find that in respect of this issue, the Arbitrator was correct in finding Intact had received a completed Application for Accident Benefits from or on behalf of Kalob Cadieux at the very latest on June 7, 2010. Accordingly, Intact’s challenge to the Arbitrator’s finding on this ground fails.

B. Whether the Arbitrator erred in finding 90 days was sufficient time for Intact to make a determination that other insurers were liable?

Decision of the Arbitrator

[85] The Arbitrator considered whether 90 days from June 7, 2010 was sufficient time to make a determination that another insurer might stand in priority and whether Intact made reasonable investigations during that timeframe. Further, the Arbitrator identified an additional issue of whether the “saving provision” of s.3(2) of Ontario Regulation 283/95 entitled Intact to a longer notice period. He cited s.3(2) of Ontario Regulation 283/95 which provides:

Section3(2) – An insured may give notice after the 90 – day period if,

(a) 90 days was not a sufficient period of time to make a determination that another insurer or insurers is liable under s.268 of the Act; and

(b) The insurer made the reasonable investigations necessary to determine if another insurer was liable within the 90 – day period.

[86] The Arbitrator found that on all the evidence before him, he was satisfied that 90 days was a sufficient amount of time to identify Federated as a possible priority insurer and that Federated would have been so identified with reasonable investigation.

[87] As previously indicated in his Reasons, he found that Intact knew the location of the accident, the name of one of the drivers and the fact that it was investigated by Ottawa Police. Counsel for the claimant had the police report by August 5, 2010. Ultimately, Intact received the police report and then identified Federated as the insurer of the transport truck within five days. Ms. Quintal received a letter dated September 8, 2010 from Paccar Leasing Company that the truck involved was a rental and that the truck was insured by Federated. It was not until September 13, 2010 that Ms. Quintal prepared a third notice to Applicant of Dispute Between Insurers form and directed same to the Fund and Federated. Again, the Arbitrator identified Ms. Quintal’s memo of June 10, 2010 wherein she clearly was aware that priority was an issue and required investigation. He found that at no time did Intact attempt to interview Ottawa police to determine the ownership and insurance details on the transport involved in the collision with the Cadieux vehicle. He went on to find that there was no evidence before him of any attempt to obtain a police report on an expedited basis. He goes on to find that Intact’s independent adjuster had in her possession a signed statement from the claimant’s mother on August 20, 2010 confirming that the claimant’s solicitor had a police report in his possession. The statement even indicated the police report number as 10-113216. The Arbitrator went on to find “even at that stage, with the 90 day limitation quickly approaching, no steps were taken to meet with Ottawa police or get an expedited copy of the report”.

[88] The Arbitrator found that with reasonable investigation Intact would have had a police report and a statement from Lucie Cadieux at a much earlier date enabling it to determine insurance details of the transport truck involved in the collision. Intact had assigned its own road adjuster who was not successful in obtaining the statement and police report. The matter was referred to an independent adjuster in August 2010, also with unsuccessful results.

[89] The Arbitrator found “more could have and should have been done by Intact’s road adjuster to obtain the statement of the claimant’s mother and a police report. The independent adjuster obtained the statement on August 20, 2010 confirming the claimant’s counsel had a police report in his possession but sent her report by ordinary mail rather than emailing or faxing the statement to adjuster Ms. Quintal.” I am satisfied the Arbitrator was correct in finding that with reasonable investigation Intact could easily have had the police report in its possession and identified Federated as the transport insurer at a much earlier date. Further, the Arbitrator was correct in finding that 90 days was a sufficient period of time to conduct a reasonable investigation. I am satisfied the Arbitrator correctly found that a reasonable and timely investigation would have identified Federated as insurer of the transport truck involved. Intact’s challenge to the Arbitrator’s finding on this ground also fails.

C. Whether the Arbitrator erred in finding Intact did not make the reasonable investigations necessary to determine if another insurer was liable within the 90 day period?

Decision of the Arbitrator

[90] The Arbitrator went on to consider the decision of Liberty v. Zurich[^7] noting that saving provisions of s.3(2) are only to be applied in a sparing manner. He went on to state “even in a situation where an insurer can demonstrate that it undertook numerous different methods to determine the availability of all alternate insurance, and even where it is clear that the witnesses and the claimant solicitors are being uncooperative, the insurer seeking to extend the 90 day notice period must still demonstrate that 90 days was not a sufficient period of time in which to secure the necessary information.”

[91] The Arbitrator was also aware that the standard of claims handling was not a standard of perfection and he cited the authority of State Farm v. ACE Insurance (Decision of Arbitrator Lee Samis dated August 22, 2011). However, in this case, the Arbitrator found that Intact’s conduct fell short of anything close to perfection. Intact recognized at an early stage that priority was an issue and the importance of obtaining a police report in a timely fashion. He found far too much time was squandered while the matter was in the hands of the in-house road adjuster. There appeared to have been a lack of communication regarding the time sensitive necessity of getting the police report information on the owner and insurer of the transport truck involved to adjuster Ms. Quintal as soon as it became available. The Arbitrator concluded that the steps taken were grossly insufficient when faced with the known 90 day notice requirement in an accident benefit claim where priority was identified at an early stage.

[92] The Arbitrator concluded that in the final analysis he was satisfied that Intact, with reasonable and timely investigation was in a position to identify Federated as an insurer of the transport involved with the information it had in its possession as of June 7, 2010. In these circumstances, he found Intact failed to meet the Notice requirements of s.3(1) of Ontario Regulation 283/95 nor the saving provision of s.3(2) of the said Regulation.

POSITION OF THE PARTIES

Position of Intact

[93] Intact appeals the Arbitrator’s determination that 90 days was a sufficient period of time for Intact to identify Federated as a possible priority insurer. It is submitted that there was no evidence to support his findings and he erred in his determination that Intact did not make reasonable investigations to determine whether another insurer was liable within the 90 day period. In so doing, he applied a standard of perfection rather than the standard of reasonableness.

Position of Federated

[94] Federated takes the position that what Intact did within the 90 day period was insufficient. Only in very limited circumstances should the saving provisions of s.3(2) be applied and certainly not in this case. Rather, Intact recognized at an early stage that priority was an issue and that it would be taking an off-coverage position. It recognized at an early stage that it required a statement from the claimant’s mother, father and a police report. It is submitted that Intact let too much time go by and did conduct a reasonable and timely investigation. Further, it did not even follow its own plan. Rather, Intact wasted too many days during the 90 day period by not doing anything. The Arbitrator considered fully what had been provided to Intact and when, as well as what steps it took or failed to take within the 90 day period.

[95] Federated submits that the Arbitrator committed no error in his reasons on this issue and that he was correct in finding that Intact, with reasonable and timely investigation, was in a position to identify Federated as the insurer of the transport truck involved in the accident as of June 7, 2010. Further, the Arbitrator was correct in finding that Intact failed to meet the Notice requirements of s.3(1) of Ontario Regulation 283/95 and did not demonstrate that 90 days was an insufficient period of time in which to secure the necessary information.

ANALYSIS

[96] Section 3(1) of Ontario Regulation 283/95 states that no insurer may dispute its obligation to pay benefits unless it gives written notice to every insurer it claims is required to pay such benefits within 90 days of the receipt of a completed application for accident benefits.

[97] The first insurer to receive the completed Application for Accident Benefits may only give notice to another insurer beyond the 90 day period set out in s.3(1) if it meets both parts of a conjunctive test set out in s.3(2) of the Regulation; namely, such insurer must demonstrate that 90 days was not a sufficient period of time to make a determination that another insurer may be responsible and the insurer made reasonable investigations to determine that another insurer may be responsible within the 90 day period.

[98] Section 3(2)(a) is intended to deal with the ability of the insurer to gather the necessary factual information to make a determination within the requisite time as to whether its policy or the policy of another insurer should answer for the benefits to be paid.[^8]

[99] In assessing whether 90 days was sufficient time to make a determination that another insurer is liable, the Arbitrator must consider the particular facts of each case and determine whether or not the insurer had enough information available to it to make a “determination” under s.3(2)(a). If not, the Arbitrator must then determine whether the investigations conducted by the insurer were reasonable in the circumstances.[^9]

[100] The purpose of Ontario Regulation 283/95 is to avoid confusion and prejudice in disputes between insurers. The limitation period found in s.3 of the Regulation was enacted to allow and encourage insurers to deal expeditiously with their disputes.[^10]

[101] The Court of Appeal has observed the following as the purpose behind the notice provisions in Ontario Regulation 283/95:

The Regulation sets out in precise and specific terms a scheme for resolving disputes between insurers. Insurers are entitled to assume and rely upon the requirement for compliance with those provisions. Insurers subject to this Regulation are sophisticated litigants who deal with these disputes on a daily basis. The scheme applies to a specific type of dispute involving a limited number of parties who find themselves regularly involved in disputes with each other. In this context, it seems to me that clarity and certainty of application are of primary concern. Insurers need to make appropriate decisions with respect to conducting investigations, establishing reserves and maintaining records. Given this regulatory setting, there is little room for creative interpretations or for carving out judicial exceptions designed to deal with the equities of particular cases.

[102] In Federated’s factum, various cases are cited underscoring the insurer’s obligation to make reasonable investigation.[^11]

[103] Even in a situation where an insurer can demonstrate that it undertook numerous different methods to determine the availability of all alternate insurance, and even where it is clear that the witnesses and the claimant’s solicitors are being uncooperative, the insurer seeking to extend the 90 day notice period must still demonstrate that 90 days was not a sufficient period of time in which to secure the necessary information. The saving provisions of s.3(2) are to only be applied in a sparing manner.[^12]

[104] Where an insurer receives information on numerous occasions both from witnesses and the claimant’s counsel that there was no coverage available at the first level of priority, such insurer is not excused from conducting additional inquiries to verify those assertions.[^13]

[105] Cited in Federated’s factum, when considering whether a received Application has been “completed”, consideration should be given to the actions of the insurer, and particularly, whether the handling of the claim was consistent with the position that they had not received a completed Application.[^14]

[106] At para. 76 of its factum, Federated submits that in a situation where it is apparent from the outset that an insurer will not bear responsibility for an accident benefits claim, such as where a policy has been terminated or has not yet come into force, the prospect of a priority dispute should be obvious and the insurer’s investigations within the 90 day notice period must be assessed in that context.[^15]

[107] I find that the Arbitrator was correct in his analysis of ss.3(1) and 3(2) of Ontario Regulation 283/95. He was correct in finding that 90 days was a sufficient period of time to make a determination that another insurer or insurers was liable under s.268 of the Act in all the circumstances. Intact was clearly aware that priority was an issue. Essentially, the Arbitrator found that the 90 day period was sufficient but at no time did Intact attempt to interview the Ottawa Police to determine the ownership and insurance details of the transport truck involved in the collision with the Cadieux vehicle. In this case, notwithstanding the recognition of priority by Ms. Quintal, and steps to be taken in the investigation, the involvement of the Intact in-house adjuster and an independent adjuster retained by Intact, with a 90 day limitation period quickly approaching, no steps were taken to meet with the Ottawa Police or to obtain a copy of the report on an expedited basis.

[108] I find the Arbitrator was correct in finding that in all the circumstances, 90 days was a sufficient amount of time to identify Federated as possible priority insurer and that Federated would have been so identified with reasonable investigation. On the record before the Arbitrator, he was correct in arriving at this finding.

[109] As for whether Intact made reasonable investigations necessary to determine if another insurer was liable within the 90 day period, the Arbitrator was also correct in his finding that more could have and should have been done by Intact’s road adjuster to obtain the statement of the claimant’s mother and the police report. Too much time passed during the 90 day period when not enough had been done. The Arbitrator was correct when he concluded:

I am satisfied that with reasonable investigation Intact could easily have had the police report in its possession and identified Federated as the transport insurer at a much earlier date. I am not satisfied that 90 days was an insufficient period of time to conduct a reasonable investigation. I am satisfied that a reasonable and timely investigation would have identified Federated as insurer of the transport involved.

[110] The onus was on Intact to satisfy the Arbitrator that 90 days was an insufficient period of time in which to secure the necessary information and that it had conducted reasonable investigations necessary to determine if another insurer was liable within the 90 day period. On the evidence, it was reasonably open to the Arbitrator to find that Intact had failed to satisfy its onus in respect of s.3(2)(a) and (b) and he was correct in arriving at this finding.

[111] I find that the Arbitrator was correct in arriving at his ultimate conclusion, namely, Intact failed to meet the notice requirements of s.3(1) and the “saving provision” of s.3(2) of Ontario Regulation 283/95.

[112] Further, I find Intact’s ground of appeal in respect of this issue also fails.

D. Whether the Order of the Arbitrator dismissing the arbitration against Federated be set aside?

POSITIONS OF THE PARTIES

Position of Intact

[113] Intact submits that while the Arbitrator corrected his award dismissing Intact’s arbitration against Federated with respect to all claimants, he dismissed the arbitration of the Fund and Old Republic against Federated without reasons, without notifying them that their priority disputes against Federated were to be dealt with at this preliminary issue hearing scheduled between Intact and Federated, and without hearing any evidence or submissions from them, contrary to the procedures in s.19 and 38 of the Arbitration Act, 1991. On this ground, Intact submits the Arbitrator’s order of November 15, 2012 ought to be set aside.

Position of Federated

[114] Federated submits that the priority issue relating to the 90 day notice was a preliminary issue only as between Intact and Federated. Old Republic and the Fund were fully aware of the hearing but decided not to participate for that very reason. Federated submits that neither the Fund nor Old Republic cared about the outcome of the preliminary issue. It was clear Intact and Federated were only dealing with the claims of Kalob. The claims of Lucie Cadieux and Kalob’s brother remain outstanding and are unaffected by the Arbitrator’s ruling on the preliminary issue. It is submitted that if the Arbitrator found that Federated had no role to play in respect of Kalob’s claim, Old Republic and the Fund had no concerns because Intact would be responsible for the claim. As it turned out, the Arbitrator decided correctly that Intact’s claim in respect of Kalob against Federated ought to be dismissed.

ANALYSIS

[115] I do not agree that the Arbitrator dismissed the arbitration against Federated completely without providing notice to or allowing Old Republic and the Fund to make any submissions regarding their priority dispute against Federated. It was agreed by the parties that the preliminary issue was only to determine whether Intact notified Federated of the priority dispute within 90 days in receipt of a completed Application for Accident Benefits for Kalob Cadieux, or, in the alternative whether 90 days was not a sufficient period of time to identify another priority insurer and whether Intact made reasonable investigations to determine if another insurer was liable under s.268 of the Insurance Act.

[116] There is no basis to support the argument that the Arbitrator exceeded his jurisdiction on the preliminary issue by not hearing submissions from the other parties and by concluding that Intact’s arbitration against Federated regarding the claims of Kalob Cadieux be dismissed.

[117] All of the parties including the Arbitrator were alive to the preliminary priority issue. The preliminary issue was a discrete one separated from the arbitration as a whole. The arbitration in respect of the other claimants survived. Old Republic and the Fund chose not to participate in a preliminary issue that concerned only Intact and Federated. All the parties and the Arbitrator were aware of that circumstance and the reason for it.

[118] I find that the Arbitrator did not exceed his jurisdiction and correctly proceeded to deal with the issue squarely before him. Intact’s appeal also fails on this ground. For all of the above reasons, Intact’s appeal fails regarding Issue #2.

DISPOSITION

[119] For the reasons given, I find the Arbitrator was correct in dismissing the arbitration by Intact as against Federated with respect to the claim of Kalob Cadieux. Accordingly, the arbitrator’s decision of November 15, 2012 as amended continues to remain in full force and effect. Both the Application and Appeal of Intact are hereby dismissed. If the parties cannot agree on costs, they agree that costs shall be determined by way of written submissions.

[120] Costs are to be determined by way of Written Submissions, if the parties cannot settle this issue. The parties are to submit a concise statement of position no longer than two pages in length, a draft Bill of Costs, Costs Outline and any relevant authorities within 14 days of this decision. They are to serve and file with my judicial assistant at Barrie within that 14 day period those Written Submissions.

DiTOMASO J.

Released: November 5, 2013

[^1]: [Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283, p.6; Lombard Canada Limited v. Royal & SunAlliance Insurance Company, 2008 ONSC 67898, p.10 para 42 [^2]: Zurich Insurance Co. v. Personal Insurance Co. (2009) Carswell Ont. 2968 (Superior Court) at para. 29; Ontario (Minister of Finance) v. Lombard Insurance Co. of Canada [2010 ONSC 1770, [2010] O.J. 1210 at para. 41 [^3]: Oxford Mutual v. Co-operators (2006), O.J. No. 4518 – paras. 21 – 23 – Tab 1 of the Respondent, Federated’s Book of Authorities [^4]: Arbitrator’s Decision in the Application and Appeal Record at Tab 5 [^5]: Ontario (Minister of Finance) v. Pilot Insurance Company (2012) ONCA 33 (supra) p. 8-9, para. 42 [^6]: Ontario (Minister of Finance) v. Pilot Insurance Company (supra) p. 9, paras. 54 & 55 [^7]: Liberty v. Zurich decision of Arbitrator M. Guy Jones, upheld on appeal in the unreported decision of the Honourable Justice Perell as released December 10, 2007. [^8]: State Farm Mutual Automobile Insurance Company v. Ontario (Minister of Finance), [2001] O.J. No. 1115 at para. 30. [^9]: Canadian General Insurance v. AXA Insurance Company (decision of Honourable P. Galligan sitting as arbitrator December 17, 1996); CGU Group (Canada) Ltd. v. Zurich Canada (decision of Arbitrator M. Guy Jones dated October, 2001); ING Halifax Insurance Company v. Travelers Indemnity Company & Great West Casualty Company (decision of Arbitrator Bruce Robinson dated October 27, 2000); Guardian Insurance Company of Canada v. Wawanesa Mutual Insurance Company (decision of Arbitrator Stephen M. Malach dated August 31, 1999) [^10]: The Co-operators v. State Farm Mutual Automobile Insurance Company (decision of Arbitrator of Bruce R. Robinson dated May 19, 2000) at p. 13 [^11]: Kingsway General Insurance Co. v. West Wawanosh Insurance Co., [2002] O.J. No. 528 at para. 10; Primmum Insurance Co. v. AVIVA Insurance Co. of Canada, [2005] O.J. No. 1477, at para. 23 – Ontario Superior Court of Justice Ducharme; The Personal Insurance Co. v. Markel Insurance Co. decision of Arbitrator M. Guy Jones dated July, 2006; Lombard Canada Limited v. Royal & Sun Alliance Co. & The Motor Vehicle Accident Claims Fund, decision of Arbitrator M. Guy Jones dated February, 2007 [^12]: Liberty v. Zurich decision of Arbitrator M. Guy Jones, upheld on appeal in the unreported decision of the Honourable Justice Perell as released December 10, 2007. [^13]: Echelon General Insurance Co. v. CGU Company of Canada a decision of Arbitrator M. Guy Jones dated March, 2007, uphold on appeal by the Honourable Madam Justice Herman unreported decision Reasons released June 5, 2008 [^14]: State Farm Insurance Companies v. ACE Insurance and Halifax Insurance Company – decision of Arbitrator Lee Samis dated August 22, 2011 at p.5 [^15]: State Farm Insurance Companies v. ACE Insurance and Halifax Insurance Company, (supra) at pp.7 and 8