ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PAFCO INSURANCE COMPANY
Applicant/Appellant
– and –
TD GENERAL INSURANCE COMPANY
Respondent
Stephen J. Kelly, for the Applicant/Appellant
Rachel E. Pano, for the Respondent
HEARD: September 13, 2013
REASONS FOR DECISION ON APPEAL
kershman, J
Introduction and Overview
1This is an appeal by the applicant, Pafco Insurance Company (“Pafco”), from the decisions of Arbitrator J.T. Fidler dated September 17, November 1, 2011 and May 24, 2012 in which, pursuant to the Insurance Act, R.S.O. 1990, c. I.8 and Regulations, he found Pafco 25 percent responsible and the respondent, TD General Insurance Company (“TD General”), 75 percent responsible for a snowmobile/automobile collision which occurred February 14, 2006. Specifically, he found that on the agreed facts before him, the fault rules did not apply, and he therefore made his loss transfer finding on the basis of ordinary rules of evidence after hearing evidence.
Background
2The loss transfer arbitration arose as a result of TD General seeking indemnification from Pafco for accident benefits it had paid to its insured. Pafco refused to indemnify TD General for the accident benefits payments.
3Section 275 of the Insurance Act provides that an insurer is entitled to indemnification in relation to benefits it has paid to an insured from the insurer of the other persons involved in the incident according to the respective degree of fault of each insurer’s insured as determined under the Fault Determination Rules, R.R.O. 1990, Reg. 668 (“FDR”). Section 275(4) of the Insurance Act provides that if the insurers are unable to agree with respect to indemnification under this section, the dispute shall be resolved through arbitration under the Arbitration Act, S.O. 1991, c. 17. This process is referred to as a loss transfer arbitration.
4The FDR are outlined in a regulation under the Insurance Act and include a series of diagrams that outline various collision situations. The FDR attribute fault to one party or the other if the collision in question is described in one of the Rules. Under the Rules, fault is determined without reference to the circumstances in which the accident occurs. If no rule under the FDR applies to the particular accident under review, then liability is to be determined by applying the “ordinary rules of law” (FDR, s. 5(1)).
Position of the Parties
5Pafco’s position is that the arbitrator erred as a matter of law in concluding that the agreed facts took the collision outside the FDR, and was therefore required to apply negligence rules. It contends that the arbitrator’s reliance on the stall by the snowmobile in the roadway to take the case outside the FDR was an error in law.
6TD General’s position is that the issues identified by the applicant are not questions of law alone, but questions of mixed fact and law. It contends that since an appeal may only be on a question of law, the appeal must fail. Alternatively, it contends that none of the agreed facts bring the collision within the FDR, and therefore the arbitrator was right to apply ordinary rules of negligence.
7Both parties agree that pursuant to the Arbitration Agreement to which both parties are signatories, an appeal may only be brought on a question of law. The standard of review is therefore one of correctness.
Analysis
8For the reasons that follow, the Court considers that this appeal raises questions of mixed fact and law that are beyond the scope of an appeal contemplated by the Arbitration Agreement, and therefore, the Court would dismiss the appeal.
9The arbitration proceeded on the basis of an Agreed Statement of Facts. The facts may be summarized briefly as follows: On February 14, 2006, a collision occurred between a snowmobile and a pick-up truck at approximately 4:15 p.m. The truck was driven by R (insured by Pafco) and the snowmobile by B (insured by TD General). B was accompanied by his son, A, who was operating another snowmobile and was not involved in the collision. The accident occurred at a crossing for a snowmobile trail which intersected the street on a diagonal. The snowmobile trail in question was maintained by the Ontario Federation of Snowmobile Clubs. The parties agreed in the agreed statement that signage for the traffic on the trail included a stop sign. When B reached the junction of the snowmobile trail and the roadway, he was on an angle facing away from oncoming southbound traffic. He stopped his vehicle behind A at the junction. A pulled out across the roadway and B pulled out behind him to cross the roadway. A safely crossed the road. After entering the highway, the engine of the vehicle operated by B stalled in the southbound lane. R collided with the snowmobile operated by B in the southbound lane.
10The parties agreed that the arbitrator would by way of a preliminary hearing determine if the FDR applied. If not, then a further hearing would take place to determine fault in accordance with the ordinary rules of law. The arbitrator released his decision on September 17, 2011, and concluded that the FDR did not apply.
11The Arbitrator noted the provision of the FDR (s. 3):
The degree of fault of an insured is determined without reference to, (a) the circumstances in which the incident occurs, including weather conditions, road conditions, visibility or the actions of pedestrians; or (b) the location on the insured’s automobile of the point of contact with any other automobile involved in the incident.
12He concluded that the fact of B stalling in the roadway was a fact that could not be ignored because even though it happened before the collision, it was a fact that was fundamental to the happening of the collision.
13The Arbitrator then considered FDR rules 7(3), 14(2) and 8 together with their explanatory diagrams. He concluded that Rule 7(3) did not apply because it contemplated no ‘traffic signals or signs’, and the agreed statement of fact was that a stop sign faced B at the trail’s intersection with the roadway. He rejected the argument that he had no evidence that the stop sign was or was not in conformity with the Highway Traffic Act, R.S.O. 1990, c. H.8, on the basis that that was not part of the agreed facts. He concluded that Rule 14(2) did not apply because it presumed that one of the parties failed to obey a stop sign, yield sign or similar sign. He concluded there was nothing in the agreed statement of fact that B failed to obey the stop sign. As for Rule 8, the Arbitrator relied on the heading to Rules 6-9 – ‘Rules for Automobiles Travelling in the Same Direction and Lane’. He concluded that, even though the language of the rule might have captured the collision described in the agreed facts, B and R were not in fact travelling in the same direction and lane. He found that Rule 8 was therefore inapplicable.
14Having concluded that the FDR didn’t apply, he then conducted a hearing, reviewed the evidence before him, and found:
The angle at which the snowmobile trail met the road was a contributing factor to the accident because it would take considerable movement for the snowmobiler to look backwards and to his left in order to see if traffic was coming in the southbound direction;
R did have the right-of-way and B, who should have seen the oncoming vehicle, had an obligation not to pull onto the roadway until it was safe to do so;
There was no evidence to support the allegation that R was speeding; and
R saw both the snowmobilers stopped at the crossing and should have slowed down. Had he done so, he might have been able to avoid the collision.
15The Arbitrator found B primarily responsible for entering the roadway without taking sufficient care; and R partially responsible because, after seeing the snowmobilers, he failed to slow down or give any warning of his approach. He found B 75 percent and R 25 percent responsible.
16The standard of review is one of correctness (Arbitration Act, s. 45(2)). The Arbitrator considered a number of authorities regarding the application of the FDR (Primmum Insurance Company v. Allstate Insurance Company (Arbitrator Jones); the Award of Arbitrator Samis in The Dominion of Canada General Insurance Company v. Kingsway Insurance Company (August 23, 1999), Toronto (upheld by Sachs, J. in Kingsway General Insurance Company v. The Dominion of Canada General Insurance Company (December 17, 1999), (Ont. S.C.); Co‑operator’s General Insurance Co. v. Canadian General Insurance Co., [1998] O.J. 2578 (Gen. Div.)). While Pafco contends he misapplied the law, the application of the law is a question of mixed fact and law. His analysis and application is deserving of deference by reason of his specific expertise. On his application of the law to the facts, he concluded that that none of the FDR applied. While Pafco contends that his analysis is subject to the standard of correctness based on ING Insurance Co. of Canada v Farmers’ Mutual Insurance Co., 2007 20107 (ON SC), [2007] O.J. No. 2150, (Ont. S.C.), the Court is satisfied that the standards of review were clarified by the Supreme Court of Canada in 1998 such that the Arbitrator’s analysis is subject to the standard of reasonableness (Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190).
Conclusion
17The Court is satisfied that the Arbitrator correctly considered the relevant principles of law. His analysis and application of the legal principles is subject to deference. The standard of review is reasonableness and therefore beyond the scope of this appeal.
18The appeal is dismissed.
Costs
19Costs outlines were submitted by the parties. The Respondent was successful on the motion and seeks full indemnity costs of $39,071.52.
20The Court finds no reason to allow full indemnity costs. Costs are ordered on a partial indemnity scale. Based on the factors set out in Rule 58.06(1) of the Rules of Civil Procedure, the Court fixes costs at $23,689.96 inclusive of fees, disbursements and HST, payable by the Applicant within 30 days.
21Order accordingly.
Honourable Justice Stanley Kershman
Released: February 7, 2014
COURT FILE NO.: 12-54721
DATE: 2014/02/07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PAFCO INSURANCE COMPANY
Applicant/Appellant
– and –
TD GENERAL INSURANCE COMPANY
Respondent
REASONS FOR DECISION ON APPEAL
Honourable Justice Stanley J. Kershman
Released: February 7, 2014