SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Bernice McKenzie (Plaintiff) and Lida Zhang and 6927360 Canada Inc. (Defendants)
BEFORE: Frank J.
COUNSEL:
J.C. Rioux and Ilana Raynai, Counsel, for the Moving Party
Clarence Lui, Counsel, for the Responding Party in Court File No.CV-11-440382,
Aviva Insurance Company of Canada
HEARD: January 22, 2013
ENDORSEMENT
1The issue on this motion is whether it is Aviva Insurance Co. of Canada or the Motor Vehicle Accident Claims Fund (the “Fund”) that must respond to the plaintiff’s tort action in which she claims damages for injuries she sustained in an accident in which she was a pedestrian when struck by a bus.
2The motion is brought by the Fund pursuant to Rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, O-Reg 194. Although Aviva took the position at the outset that this was not an appropriate case for the determination of a question of law on a motion as there are no cases on point, it conceded that the motion should proceed, acknowledging that a trial judge would be in no better position to determine the issue.
3The circumstances giving rise to this action that are relevant to this motion are not in dispute. They are as follows:
(a) the driver of the bus that struck the plaintiff was an employee of the defendant 6927360 Canada Inc., (the “company”) and was driving a bus owned by the bus company;
(b) the company was a named insured under a motor vehicle liability insurance police issued by Aviva; the bus was not a listed vehicle under that policy at the time of the accident, although it was listed and thereby became insured some days later;
(c) the plaintiff sent an application for the payment of statutory accident benefits to Aviva; Aviva responded by paying her those benefits; it did not dispute its obligation to pay these benefits within 90 days, as required by section 3 of Disputes Between Insurers O. Reg. 283/95 (Regulation 283) with the result that it is Aviva that must continue to pay statutory accident benefits to the plaintiff for so long as she is entitled to them;
(d) had Aviva disputed its obligation, the result would have been a finding that it was not obligated to pay statutory accident benefits to the plaintiff;
(e) the plaintiff commenced this tort action against the driver and owner of the bus; as a result of the default of the defendants, the action is being defended by the Fund; it pleads that it is Aviva, not the Fund, that must respond to the tort claim pursuant to uninsured coverage;
(f) the plaintiff also commenced an action against Aviva, claiming uninsured motorist coverage pursuant to section 5 of the standard auto policy of insurance; Aviva defended, pleading that it is not obliged to provide uninsured motorist coverage to the plaintiff.
4The Fund’s position is that because the plaintiff is entitled to the payment of accident benefits by Aviva, she is an insured pursuant to the Insurance Act, R.S.O. 1990, c. I.8, and as such, is entitled to uninsured motorist coverage pursuant to s. 265(1) of the Act.
5To determine whether the plaintiff is an insured pursuant to a policy issued by Aviva, the first question to consider is whether Aviva was required to respond to the plaintiff’s claim for accident benefits. Unless the answer is ‘yes’, there is no basis for continuing the analysis as I have been given no law to suggest that a payment made in error by an insurer transforms the payee into an insured under an otherwise non-existent policy.
6I find that Aviva’s payment of accident benefits to the plaintiff in response to her application was not an error on its part.
7Section 2 of Regulation 283 provides that the first insurer that receives an application for the payment of statutory accident benefits is responsible for paying those benefits to a claimant pending the resolution of any dispute as to which insurer is required to pay the benefits. So long as there is some nexus between the insurer receiving the application for benefits and the insured, the insurer cannot deny payment on the basis of an assertion that another insurer or the Fund should be paying, pending the determination of that issue: Kingsway General Insurance Co. v. Ontario (Minister of Finance) 2007 ONCA 62, [2007] O.J. No. 290 at para. 20.
8For there to be the necessary nexus, all that is necessary is that there be some connection. It is only where the connection is totally arbitrary that the insurer can refuse to pay: Allstate Insurance Co. of Canada v. Brown, 1998 18877 (ON SC), [1998] O.J. No. 2318 (C.A.) at para. 15.
9The owner of the bus that struck the plaintiff was a named insured under a policy of motor vehicle liability insurance listing a number of vehicles, issued by Aviva. In accordance with the policy, the insured would add and remove vehicles listed on the Aviva policy. The bus had been listed as an insured vehicle before the accident, was removed from the policy and relisted a week later. This is a sufficient connecton to obligate Aviva to respond to the plaintiff’s application and make the accident benefit payments to her pending a determination of its dispute. In making the payments, Aviva was acting in accordance with its statutory obligation and not as a result of an error.
10This finding requires that I consider the next question: Does the plaintiff, through Aviva’s obligation to pay accident benefits to her, become an insured and entitled to uninsured motorist coverage from Aviva?
11The Fund relies on the decision in Taggart (Litigation Guardian) v. Simmons, 2001 24003 (ON CA), [2001] O.J. No. 642 (C.A.) for the submission that because the plaintiff fits the definition of an insured pursuant to s.224(1) of the Insurance Act, by virtue of her receiving accident benefits from Aviva, she is an insured under the Aviva policy under which the payments are being made and is therefore entitled to the uninsured motorist coverage that is statutorily mandated as coverage for “a person insured under the contract” (s. 265(1)).
12In Taggart, the court of appeal stated that as there is no explicit definition of ‘insured’ in s. 265(1) of the Insurance Act, its meaning must be informed by s. 224(1) of the Act. It sets out under what circumstances an individual is an insured for the purposes of statutory accident benefits. It defines insured as including “…every person who is entitled to statutory accident benefits under the contract…”
13The plaintiff in Taggart was a passenger in an uninsured car that went off the road, catastrophically injuring him. He sought uninsured motorist coverage pursuant to a policy in the name of a person whom he viewed as a father, though they were not related. The plaintiff was held to be a dependent of this person and therefore entitled to accident benefits under his motor vehicle liability policy. The court held that because the plaintiff fit the definition of insured under s. 224(1) and was entitled to accident benefits, he must also therefore be entitled to Uninsured Motorist Coverage under s. 265(1).
14But, Taggart and the other cases following it on which the Fund relies, are distinguishable.1 In each of those cases, the injured party sought coverage pursuant to a valid motor vehicle liability policy of a third party. In none of those cases was the injured party seeking uninsured motorist coverage from an insurer connected to an uninsured vehicle as is the case here. Taggart does not stand for the principle that an injured person can obtain uninsured motorist coverage from an insurer solely on the basis of that person’s entitlement to statutory accident benefits from that insurer.
15The position taken by the Fund creates a logical impossibility. The Fund argues that the bus that hit the plaintiff was uninsured and therefore the plaintiff is entitled to uninsured motorist coverage pursuant to the Aviva policy of insurance. But, if the bus was uninsured there is no policy of insurance pursuant to which Aviva would provide uninsured motorist coverage. The decision in Taggart cannot be understood as creating coverage in the absence of a policy.
16Additionally, the interpretation of Taggart which the Fund urges me to accept requires an approach that is inconsistent with the well established principle that an insurer’s obligation to indemnify comes into being at the same time as the obligation of the tortfeasor to pay damages. (Somersall v. Friedman, 2002 SCC 59, [2002] 3 S.C.R. 109 at para. 30). Based on Somersall and the cases that followed it including Soriano v. Palacios, 2005 18840 (ON CA), [2005] O.J. No. 2217 (C.A.) and Seetal v. Quiroz, 2009 92114 (ON SC), [2009] O.J. No. 2394 (S.C.J.), the plaintiff’s entitlement to coverage from Aviva must be determined as of when the accident occurred and not when Aviva became obligated to pay the plaintiff accident benefits.
17Aviva was required to pay the plaintiff accident benefits pursuant to section 2 Regulation 283 and not pursuant to an existing policy of motor vehicle liability insurance. There is no Aviva policy pursuant to which the plaintiff could be an insured.
18I find that the plaintiff is not entitled to Uninsured Motorist Coverage from Aviva.
19The parties have agreed that the successful party is entitled to costs in the total of $7500. Accordingly, Aviva shall have costs in that amount.
Frank J.
Date: February 11, 2013
4.
Footnotes
- McArdle v. Burgler (2007), 2007 ONCA 659, 87 O.R. (3d) 433 (C.A.); Foster v. Young, [2002] O.J. No. 3774 (C.A.)