Court File and Parties

CITATION: Unifund Assurance Companyv. Security National Insurance Company, 2016 ONSC 2334

COURT FILE NO.: CV-16-544324

DATE: 20160406

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: UNIFUND ASSURANCE COMPANY, Applicant

AND:

SECURITY NATIONAL INSURANCE COMPANY, Respondent

BEFORE: R. F. Goldstein J.

HEARD: April 5, 2016

APPEARANCE: Brenda Cuneo, for the Applicant, Unifund Assurance Company

Stuart Norris, for the Respondent, Security National Insurance Company

ENDORSEMENT

[1] Should this Court grant leave to appeal an arbitrator’s preliminary ruling that a person injured while riding an ATV on private property was in an “accident” according to the Statutory Accident Benefits Schedule, or SABS, as it is commonly called? In my view, the proposed appeal raises a question of law, and otherwise meets the test for leave to appeal.

[2] The background facts are simple and tragic. On October 5, 2012 Catherine Larmer was riding an ATV on her boyfriend’s property. Her boyfriend owned the ATV and insured it with Security National. She was in a serious accident. She suffered catastrophic injuries. She applied to her own insurance company, Unifund, for accident benefits. Unifund initially adjusted the claim and paid benefits for about 15 months. Unifund then advised Ms. Larmer that she did not qualify for benefits because the incident with the ATV was not an “accident” as defined by the SABS. Security National denied Ms. Larmer’s claim on the basis that she had already commenced an accident benefits claim with Unifund.

[3] Under Ontario’s highly regulated insurance system Ms. Larmer will receive insurance benefits. Security National and Unifund are at loggerheads as to which of them should pay. These kinds of disputes raise an issue of priority between insurance companies under s. 268 of the Insurance Act. Private arbitrations are routinely employed to resolve priority disputes. In this case Kenneth J. Bialkowski was appointed as the arbitrator.

[4] The mediation revolved around the question of what constitutes an “accident” for the purposes of the SABS. If the ATV incident was an “accident” then Unifund, as Ms. Larmer’s insurer, is responsible for paying the accident benefits. If the ATV incident was not, then Security National is responsible for paying. Whether or not the ATV incident was an “accident” turns on s. 2(1) of the SABS, which defines an accident as:

“accident” means an incident in which the use or operation of an automobile directly causes an impairment…

[5] Whether the incident was an “accident” in turn requires determining whether the ATV is an “automobile”. Automobile is not defined in the SABS. The parties agree that whether the ATV is an automobile is to be determined by the test set out in the Ontario Court of Appeal’s decision in Adams v. Pineland Amusements Ltd. (2007), 2007 ONCA 844, 88 O.R. (3d) 321 (C.A.) at para. 7.

[6] December 9, 2015 Arbitrator Bialkowski issued his preliminary ruling. He found that the incident was an “accident”. He found that the ATV was an automobile under the test. Accordingly, he determined, Unifund must pay.

[7] Unifund now seeks leave to appeal. Pursuant to s. 45(1) of the Arbitration Act where there is no arbitration agreement (and there is none here) a party may appeal to the Superior Court on a question of law alone:

45(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that,

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and

(b) determination of the question of law at issue will significantly affect the rights of the parties.

[8] Both parties have gone into some detail about the merits of Arbitrator Bialkowski’s decision. Briefly, Unifund argues that Arbitrator Bialkowski erred in law in his application of the test. Since this preliminary question will determine the mediation, it is obvious that the test is met and leave should be granted. Security National argues that no appeal is available because the question of whether or not the incident was an “accident” is a question of fact; in any event, he did not err.

[9] An application for leave to appeal does not involve a determination of the merits of the case. It is unnecessary for me to determine whether Arbitrator Bialkowski erred, or even whether there are grounds to believe that he erred. That is not the test.

[10] The first issue is whether the proposed appeal raises a question of law. In my view it does. That is because this case is about statutory interpretation. Questions of statutory interpretation generally involve questions of law: Southam v. Director Investigation and Research, 1997 CanLII 385 (SCC), [1997] 1 S.C.R 748 at para. 36. In that case, Iacobucci J. explored the distinction between a question of fact, a question of law, and a question of mixed fact and law:

… Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests. A simple example will illustrate these concepts. In the law of tort, the question what "negligence" means is a question of law. The question whether the defendant did this or that is a question of fact. And, once it has been decided that the applicable standard is one of negligence, the question whether the defendant satisfied the appropriate standard of care is a question of mixed law and fact.

[11] Iacobucci J. went on to recognize that the distinction between a question of law and a question of mixed fact and law is often difficult. As I have noted, statutory interpretation usually raises a question of law. The more narrowly the principle applies, the more likely it is to be purely a question of fact.

[12] Arbitrator Bialkowski was required to consider the definition of “accident” in s. 2(1) of the SABS. There are no significant facts in dispute in this mediation. It is simply about who pays, and who pays is a resolved by interpreting a statue. That makes it a question of law.

[13] Security National relies on Rothstein J.’s statement in Sattva that courts should be cautious in finding that contractual disputes raise questions of law. Such questions, he said, are inherently fact-specific. That is certainly correct, but the dispute between Security National and Unifund is not a contractual dispute. It is a dispute over the applicability of legislation in a highly regulated industry.

[14] I turn now to the actual specifics of the test. In my view, it is clear that the appeal is important. I am informed that there is a great deal of money involved for the insurance industry and I have no reason to doubt that. That answers the first part of the test. The appeal will, for all intents and purposes, resolve the mediation. That answers the second part.

[15] Leave to appeal is therefore granted.

[16] Costs are reserved to the judge hearing the appeal.

R. F. Goldstein J.

Date: April 6, 2016