Intact Insurance Company v. Federated Insurance Company of Canada et al.

[Indexed as: Intact Insurance Co. v. Federated Insurance Co. of Canada]

Ontario Reports

Ontario Superior Court of Justice,

Diamond J.

February 2, 2016

129 O.R. (3d) 549 | 2016 ONSC 719

Case Summary

Arbitration — Abuse of process — Statutory accident benefits — Claimant's father's motor vehicle insurance policy cancelled by Intact five days before motor vehicle accident — Father subsequently convicted of operating motor vehicle without insurance — Dispute over whether Intact or Federated was liable to pay statutory accident benefits proceeding to arbitration — Arbitrator erring in ruling that abuse of process doctrine did not apply and that Federated was free to relitigate issue of whether father was insured person at time of accident — Federated not leading any "evidence to the contrary" under s. 22.1 of Evidence Act to rebut conviction — Evidence Act, R.S.O. 1990, c. E.23, s. 22.1.

A statutory accident benefits claimant was injured in a motor vehicle accident while he was a passenger in a car driven by his father. While the father's vehicle was previously insured by Intact, it was Intact's position that the policy was cancelled for non-payment five days before the accident. The father was subsequently convicted of operating a motor vehicle without insurance. A dispute over whether Intact or Federated was liable to pay statutory accident benefits to the claimant proceeded to arbitration. Intact asked the arbitrator to determine whether the doctrine of abuse of process applied to preclude Federated from arguing that the father was an insured person at the time of the accident. The arbitrator ruled that the abuse of process doctrine did not apply and that, even if it did apply, fairness dictated that the conviction should not be binding. Intact brought an application for an order overturning the arbitrator's decision and confirming that the abuse of process doctrine precluded Federated from relitigating the issue of the father's uninsured status.

Held, the application should be allowed.

Section 22.1 of the Evidence Act precluded Federated from relitigating the issue of whether the father was an insured person at the time of the accident, as Federated had not led any "evidence to the contrary" to rebut the conviction. The arbitrator erred in law by refusing to apply the abuse of process doctrine. Fairness did not dictate that the administration of justice would be better served by permitting Federated to relitigate the conviction. The consequences of the conviction to the father were sufficiently major to generate a full and robust response to the criminal charges. Moreover, the arbitrator erred in law in focusing upon the irrelevant consideration of whether Federated was a party to the criminal proceedings.

Toronto (City) v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77, [2003] S.C.J. No. 64, 2003 SCC 63, 232 D.L.R. (4th) 385, 311 N.R. 201, J.E. 2003-2108, 179 O.A.C. 291, [2003] CLLC Â220-071, 17 C.R. (6th) 276, REJB 2003-49439, 120 L.A.C. (4th) 225, 59 W.C.B. (2d) 334, apld

Andreadis v. Pinto (2009), 2009 CanLII 50220 (ON SC), 98 O.R. (3d) 701, [2009] O.J. No. 3910, 78 C.C.L.I. (4th) 123, [2009] I.L.R. I-4899, 80 C.P.C. (6th) 185, 91 M.V.R. (5th) 75 (S.C.J.); [page550] Duncan v. Morton, [2012] O.J. No. 2319, 2012 ONSC 3105, [2012] I.L.R. I-5297 (S.C.J.), consd

Other cases referred to

Combined Air Mechanical Services Inc. v. Flesch (2011), 108 O.R. (3d) 1, [2011] O.J. No. 5431, 2011 ONCA 764, 286 O.A.C. 3, 97 C.C.E.L. (3d) 25, 14 C.P.C. (7th) 242, 13 R.P.R. (5th) 167, 93 B.L.R. (4th) 1, 10 C.L.R. (4th) 17, 211 A.C.W.S. (3d) 845; Georgiou v. Vassos, [2010] O.J. No. 4865, 2010 ONSC 5654, 195 A.C.W.S. (3d) 287 (S.C.J.); Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, 314 O.A.C. 1, 453 N.R. 51, 2014EXP-319, J.E. 2014-162, EYB 2014-231951, 95 E.T.R. (3d) 1, 12 C.C.E.L. (4th) 1, 27 C.L.R. (4th) 1, 21 B.L.R. (5th) 248, 46 C.P.C. (7th) 217, 37 R.P.R. (5th) 1, 366 D.L.R. (4th) 641, 2014EXP-319, J.E. 2014-162

Statutes referred to

Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25 [as am.]

Evidence Act, R.S.O. 1990, c. E.23, s. 22.1

Insurance Act, R.S.O. 1990, c. I.8 [as am.]

APPLICATION to set aside the ruling of an arbitrator.

Joseph Lin and Dana Hyeseung Yoon, for applicant (appellant in appeal).

Mark Donaldson, for respondent (respondent in appeal).

DIAMOND J.: —

Overview

[1] The applicant, Intact Insurance Company ("Intact"), and the respondent Federated Insurance Company of Canada ("Federated") are currently parties to a private arbitration in which the arbitrator is charged with determining, inter alia, whether Intact or Federated is liable to remit payment of accident benefits due to a claimant as a result of motor vehicle accident which occurred on April 25, 2010 (the "accident").

[2] The claimant was a passenger in a vehicle driven by his father. While the father's vehicle was previously insured by Intact, it was and remains Intact's position that as of the date of the accident, the policy had been cancelled for non-payment.

[3] The father was subsequently convicted of operating a motor vehicle without insurance. As a result, Intact requested that the arbitrator determine a "preliminary issue" of whether the doctrine of abuse of process applied to preclude Federated from adducing evidence and arguing that the father was an insured person as of the date of the accident.

[4] By decision released on October 23, 2015, the arbitrator ruled that the abuse of process doctrine did not apply in the arbitration before him, and thus Federated was permitted to [page551] lead evidence and argue that the father was an insured person as of the date of the accident.

[5] In accordance with the terms of the arbitration agreement signed between the parties, Intact now brings this application seeking an order overturning the arbitrator's decision, and an order confirming that the abuse of process doctrine precludes Federated from relitigating the issue of the father's uninsured status.

Summary of Relevant Facts

[6] As stated, the accident took place on April 25, 2010. Five days earlier, Intact cancelled the father's policy for non-payment. As found by the arbitrator, the motor vehicle accident report completed by the attending police officer "left blank the area where details of insurance on the father's vehicle would normally be found".

[7] The claimant sustained injuries as a result of the accident and submitted an application to Intact for accident benefits. That application was in fact submitted to Intact under a policy issued to the claimant's grandparents because, as set out above, his father's policy had been cancelled five days before the accident.

[8] Intact adjusted and continues to adjust the claimant's accident benefits claims. The claimant was paid accident benefits by Intact.

[9] On November 19, 2010, the father was convicted of (a) operating a motor vehicle without insurance in contravention of the provisions of the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25; and (b) disobeying a (red light) traffic signal. Of note, these convictions were filed by Intact in the arbitration as part of the father's driver history profile from a search obtained from the Ontario Ministry of Transportation.

[10] Apart from the motor vehicle accident report, and the father's driver history profile, the only other evidence submitted to the arbitrator consisted of transcripts from the examinations under oath of Monique Quintal (Intact's senior accident benefit claims representative) and Cheryl Young (Intact's personal lines underwriter). Both examinations took place on May 30, 2012. Although Federated attempted to secure the attendance of the father for an examination under oath, the father never responded to Federated's request.

[11] I note that at no time did Federated request an order from the arbitrator compelling the father's attendance.

[12] According to the evidence obtained from the examinations of Intact's representatives, the father's policy premium payment [page552] for February 2010 was returned NSF but Intact was able to successfully re-collect that premium shortly thereafter. The father's March 2010 policy premium payment was also returned NSF and Intact's computer system then generated a registered cancellation letter.

[13] Intact's representatives agreed to make further inquiries with respect to whether there was a policy or procedure in place with respect to its re-collection policy at the time of the NSF payments. Federated argued before me that Intact never complied with the undertakings given by its representatives. While I will have more to say about this submission hereinafter, it does not appear that any unsatisfied undertakings played into the arbitrator's decision other than the arbitrator's acknowledgment that it was Federated's intention to fully explore the father's policy cancellation issue and introduce evidence in the arbitration that the father's policy was not properly cancelled.

[14] Once again, I note that at no time did Federated ever request an order from the arbitrator compelling Intact to fulfill any undertakings given at the examinations of its representatives.

The Ruling

[15] Intact argued that the provisions of s. 22.1 of Evidence Act, R.S.O. 1990, c. E.23 precluded Federated from challenging or leading any evidence to relitigate the issue of the father being an uninsured person as of the date of the accident.

[16] Both Intact and Federated relied upon the doctrine of abuse of process in their respective submissions before the arbitrator. Federated argued that the presumption that proof of a conviction is proof that the crime was committed in a subsequent civil proceeding is a rebuttable presumption, and that the facts of this case fell within one of the exceptions to the abuse of process doctrine, namely, where fairness dictates that the original result should not be binding in the new context (i.e., the father's criminal conviction should not be dispositive in the arbitration of his uninsured status).

[17] The arbitrator agreed with Federated's position. In support of his decision, the arbitrator found, inter alia (emphasis in bold):

(a) Federated wished to introduce evidence contrary to the conviction at first instance during the arbitration;

(b) Federated played no role whatsoever in the original criminal process and was not in a position to influence the outcome of that process; [page553]

(c) there may well be fresh, new evidence emanating from the examinations under oath of Intact's representatives that was not readily available at the time of the father's conviction;

(d) Federated's interests are diametrically opposed to those of Intact's;

(e) Intact provided no evidence as to the nature or extent of any process which led to the father's convictions;

(f) there was no information in the record as to whether the father's convictions follow a guilty plea, a plea bargain or a full hearing of the charges on the merits; and

(g) it would thus be unfair to deny Federated an opportunity to lead evidence contrary to the initial conviction in a context of a prior dispute.

[18] Accordingly, the arbitrator held that the doctrine of abuse of process did not apply in the context of the priority dispute between Intact and Federated, and thus Federated was at liberty to relitigate to introduce evidence to challenge the father's uninsured status.

Standard of Review

[19] Pursuant to clause 10 of the arbitration agreement, either party may appeal a decision of the arbitrator on a point of law or on a point of mixed fact in law to a judge of the Ontario Superior Court of Justice, without leave of the court.

[20] Both parties agree that the applicable standard of review for decisions of arbitrators under the Insurance Act, R.S.O. 1990, c. I.8 is one of "correctness".

[21] Federated submits that the arbitrator's decision involved a determination of issues of mixed fact and law, and as such the applicable standard of review ought to be "reasonableness".

[22] I do not find the arbitrator's decision to be based in mixed fact and law. As stated by the arbitrator himself:

It is not for me to consider the facts aforesaid at this time as to whether Intact's cancellation of the Cadieux automobile policy met the strict requirements of cancellation as set out in the policy provisions but only to consider them as to whether Federated may be able to argue that the cancellation did not meet those requirements.

[23] Apart from the motor vehicle accident report and the father's driver's history profile, there were, essentially, no other facts before the arbitrator. Indeed, the arbitrator relied upon the [page554] potential existence of "fresh new evidence" from Intact's representatives as, in part, the basis for his decision.

[24] Accordingly, I find that Intact's appeal raises questions of law and as such the applicable standard of review is one of correctness.

Section 22.1 of the Evidence Act

[25] The provisions of s. 22.1 of the Evidence Act state as follows:

22.1(1) Proof that a person has been convicted or discharged anywhere in Canada of a crime is proof, in the absence of evidence to the contrary, that the crime was committed by the person, if,

(a) no appeal of the conviction or discharge was taken and the time for an appeal has expired; or

(b) an appeal of the conviction or discharge was taken but was dismissed or abandoned and no further appeal was available.

(2) Subsection (1) applies whether or not the convicted or discharged person is a party to the proceeding.

[26] Section 22.1 of the Evidence Act thus renders the proof of a conviction admissible in a subsequent proceeding, with the question then becoming whether the conviction can be rebutted by "evidence to the contrary".

[27] As held by Justice Brown (as he then was) in Andreadis v. Pinto (2009), 2009 CanLII 50220 (ON SC), 98 O.R. (3d) 701, [2009] O.J. No. 3910 (S.C.J.), s. 22.1 of the Evidence Act covers offences under both federal criminal legislation and provincial regulatory legislation including the Compulsory Automobile Insurance Act.

Abuse of Process

[28] The doctrine of abuse of process was discussed at length by the Supreme Court of Canada in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, [2003] S.C.J. No. 64. In C.U.P.E., the Supreme Court of Canada held that in considering the doctrine of abuse of process, the court must focus upon the integrity of the adjudicative process itself. Generally speaking, relitigation is detrimental to the adjudicative process in three respects:

(a) relitigation may not yield a more accurate result than the original proceeding;

(b) relitigation may prove to be a waste of judicial resources, an unnecessary expense and/or an additional hardship for witnesses; and [page555]

(c) relitigation may undermine the credibility of the entire judicial process, thereby diminishing its authority, credibility and aim of finality.

[29] The Supreme Court of Canada established three so-called "exceptions" to the doctrine of abusive process. Those three exceptions are as follows:

(a) when the original proceeding is tainted by fraud or dishonesty;

(b) where fresh, new evidence, previously unavailable, conclusively impeaches the original result; or

(c) where fairness dictates that the original result should not be binding in the new context.

Jurisprudence

[30] The arbitrator placed significant reliance upon the decision of Justice Quigley in Duncan v. Morton, [2012] O.J. No. 2319, 2012 ONSC 3105 (S.C.J.). In Duncan, as a result of a motor vehicle accident, the plaintiff brought an action against the defendant and the uninsured insurer. The defendant had pleaded guilty to operating a motor vehicle without consent, but the insurer wanted to establish in the civil proceeding that the defendant had consent, or at a minimum implied consent, to operate the vehicle on the date of the accident.

[31] The plaintiff brought a motion for summary judgment. Relying upon Combined Air Mechanical Services Inc. v. Flesch (2011), 108 O.R. (3d) 1, [2011] O.J. No. 5431, 2011 ONCA 764 -- and not the Supreme Court of Canada's current test for summary judgment in Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7 -- Justice Quigley concluded that it would not be fair to the insurer to grant summary judgment on the basis that the defendant's conviction had preclusive evidentiary effect.

[32] A review of the Duncan decision, and the late Justice Lax's decision dismissing a motion for leave to appeal, discloses that the insurer clearly led "evidence to the contrary" as required by s. 22.1 of the Evidence Act. The insurer tendered the transcripts from the hearing of the defendant's guilty plea along with two affidavits from the insurer's investigators attaching notes of their investigation. It was that evidence which raised questions about whether the motor vehicle was indeed operated by the defendant without consent. [page556]

[33] In Andreadis, Justice Brown was asked to determine a preliminary issue by way of a "voir dire" at the trial of a civil proceeding. The preliminary issue was whether the defendant, after pleading guilty to permitting her motor vehicle to be operated without insurance, would be able to lead evidence and relitigate the facts essential to her conviction in the civil proceeding. Unlike the record before the arbitrator in this case, the defendant tendered evidence before Justice Brown relating to, inter alia, the facts surrounding her guilty plea, including her belief that she had pleaded to a different charge altogether.

[34] In finding that the defendant was precluded from relitigating the facts essential to her conviction, Justice Brown found [at para. 27] that the defendant had not "adduced credible evidence to show that her guilty plea was anything other than voluntary".

[35] In Georgiou v. Vassos, [2010] O.J. No. 4865, 2010 ONSC 5654 (S.C.J.), Justice Roberts (as she then was) was asked to determine the legal effect of a defendant's guilty plea to assault in a subsequent civil proceeding brought by the plaintiff against the defendant for personal injuries as a result of being pushed through a plate glass window. Justice Roberts relied upon s. 22.1 of the Evidence Act, reviewed the evidentiary record before her and concluded that the defendant's guilty plea was voluntary, unequivocal and informed. In precluding the defendant from relitigating the facts essential to his conviction of his assault, Justice Roberts held as follows [at paras. 13, 15 and 16]:

Mr. Vassos has not submitted any evidence that he was impaired by any personal or other pressure to reason and weigh the risks of not accepting the offer to plea and proceeding to trial. Again, by his own evidence, over a period of several months, Mr. Vassos appears to have considered all relevant factors before coming to his decision to accept the guilty plea.

Finally, Mr. Vassos does not question the validity of his guilty plea or the process, or suggest that there is new, fresh evidence that he should have submitted at the time of his plea. The great importance to him of the stakes in the criminal proceedings was underscored by the reasons that he gave for accepting the guilty plea.

As a result, Mr. Vassos has not demonstrated that there is any basis to allow him to adduce evidence to rebut his conviction or to re-litigate the facts essential to the conviction of assault against Mr. Georgiou and that he was responsible for Mr. Georgiou falling through the store window. [page557]

Decision

[36] A theme running through these cases is the onus upon the party resisting the application of s. 22.1 of the Evidence Act to tender admissible evidence to the contrary. As stated by counsel for Intact during argument of this application, there is no onus upon Intact to "super prove" the father's conviction.

[37] The arbitrator made the following findings:

Federated maintained in the present dispute that the Applicant has provided no evidence, by way of a statement, statutory declaration or a corresponding transcript as to the nature or extent of any proceedings which lead to the convictions noted on Patrick Cadieux's Driver Record Profile. From that Profile, it would appear that the charges proceeded together, as they bear the same court case number. However, there is no information as to whether those convictions follow the guilty plea, a plea bargain situation or a full hearing of the charges on the merits. It is clear that the convictions preceded the additional information secured from the witnesses at the Examination under Oath by a period of some eighteen months. There is no information as to whether Patrick Cadieux had the benefit of legal advice or representation prior to the convictions being registered as against him November 19, 2010.

[38] As stated above, there is no onus upon Intact to prove anything other than the conviction itself. In my view, the arbitrator conflated the onus under s. 22.1 of the Evidence Act and committed an error in law.

[39] The onus to lead "evidence to the contrary" was clearly upon Federated. In the record before the arbitrator, not only was there no "credible evidence" relating to the father's conviction, there was no evidence to the contrary at all. This is highlighted by the arbitrator's own conclusions that it was Federated's intention to "hopefully" tender and introduce some unspecified, new evidence during the arbitration that could potentially amount to "evidence to the contrary".

[40] It was open to Federated to bring motions before the arbitrator seeking an order compelling the father to attend an examination under oath, and/or an order compelling Intact's representative to answer undertakings which Federated claimed were relevant and outstanding. Federated chose not to do so, and in my view proceeded at its peril.

[41] As the preliminary issue was brought by way of (or akin to) a voir dire, the time for Federated to tender admissible evidence was in advance of or at the hearing of the preliminary issue. If all Federated had to do was "promise" to marshal some evidence to the contrary at some future date in the arbitration, then what was the point of the determination of the preliminary issue at all? [page558]

[42] Accordingly, I find that the arbitrator erred in law by refusing to apply the doctrine of abuse of process with respect to Federated's intention to relitigate the facts surrounding the father's conviction.

[43] The arbitrator further found that even if the doctrine of abuse of process did apply, the fact situation nevertheless fell within the third C.U.P.E. exception, namely, where "fairness dictates that the original result should not be binding in the new context".

[44] As stated above, in C.U.P.E. the Supreme Court of Canada held that the doctrine of abuse of process is not focused upon the interest of the parties, but solely upon the integrity of the adjudicative process itself [at para. 53]:

There are many circumstances in which the bar against re-litigation, either through the doctrine of res judicata or that of abuse of process, would create unfairness. If, for instance, the stakes in the original proceedings were too minor to generate a full and robust response, while the subsequent stakes were considerable, fairness would dictate that the administration of justice would be better served by permitting the second proceeding to go forward than by insisting that finality should prevail.

[45] Under the Compulsory Automobile Insurance Act, the penalty for a conviction for operating an automobile without insurance is a fine not less than $5,000 and not more than $25,000 for a first conviction. Coupled with the fact that the father was also simultaneously convicted of failing to obey a (red light) traffic signal, I agree with Intact that the stakes were sufficiently "major" for the father to generate a full and robust response to the criminal charges. As such, fairness does not dictate that the administration of justice would be better served by permitting Federated to relitigate the conviction during the arbitration.

[46] It is important to note that s. 22.1 of the Evidence Act applies whether or not the father is a party to the arbitration. In my view, the arbitrator focused upon whether Federated was a party to the criminal proceeding in deciding whether or not fairness dictated that Federated be provided with an opportunity to relitigate the facts surrounding the conviction. This was an error in law, and I do not believe that Federated's interest was "opposite" to that of the father. How would Federated have been in a position to influence the outcome of the father's conviction? On the contrary, it would appear to be in the interest of both the father and Federated for the father to have operated the vehicle while insured at the time of the accident. [page559]

[47] For all these reasons, I allow the application and grant

(a) an order overturning the arbitrator's decision dated October 23, 2015; and

(b) an order precluding Federated from leading any evidence and/or relitigating the father's conviction for operating a motor vehicle without insurance on the date of the accident.

Costs

[48] At the conclusion of the hearing, counsel for the parties agreed that the successful party be awarded costs of the application in the all-inclusive amount of $7,000. I therefore make that order.

[49] With respect to Intact's costs of the hearing of the preliminary issue before the arbitrator, I would urge the parties to agree upon that figure or, in the alternative, I direct them to make submissions before the arbitrator in light of these reasons.

Application allowed.

End of Document