Court File and Parties
COURT FILE NO.: CV-16-564074 DATE: 2017-06-01 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
State Farm Mutual Automobile Insurance Company Applicant/Respondent on Appeal – and – Belair Insurance Company Respondent/Applicant on Appeal
COUNSEL: Daniel Strigberger/Tim Gillibrand, for the Applicant/Respondent on Appeal Joseph Lin/Rohit Sethi, for the Respondent/Applicant on Appeal
HEARD: April 28, 2017
Decision on Application
r.d. gordon, r.s.j.
Overview
[1] Belair Insurance Company (“Belair”) appeals the loss transfer decision of arbitrator Philippa Samworth dated October 19, 2016, in which she found Belair responsible for indemnifying the respondent State Farm Mutual Automobile Insurance Company (“State Farm”) for 100% of statutory accident benefits paid to and on behalf of its insured.
Factual Background
[2] The dispute arises out of a motor vehicle accident that occurred on August 30, 2012, at approximately 6:07 p.m. at the intersection of Cummings Avenue and Burleigh Private in Ottawa. The facts are not contested.
[3] Kevin Colbourne was the driver of a motorcycle insured by State Farm. Melissa Marie-Eve Brunet was the driver of an Acura automobile insured by Belair.
[4] Cummings Avenue is a two-lane road having one northbound lane and one southbound lane. Burliegh Private is a residential street running east from Cummings Avenue and leading to a townhouse complex.
[5] Mr. Colbourne was travelling northbound on Cummings Avenue. Ms. Brunet was travelling southbound on Cummings Avenue.
[6] At the time of the incident, Ms. Brunet was in the process of making a left hand turn from southbound Cummings Avenue onto Burleigh Private.
[7] Mr. Colbourne’s motorcycle struck the right passenger side of Ms. Brunet’s automobile in the intersection.
[8] The accident occurred entirely in the northbound lane of Cummings Avenue (the east side of the intersection of Cummings Avenue and Burleigh Private).
[9] Burleigh Private is a residential street. At its intersection with Cummings Avenue, Burleigh Private does not have any traffic signals or signs. The arbitrator found that Burleigh Road was a private road that intersected with Cummings Avenue. That finding is not challenged.
[10] As a result of the accident, Mr. Colbourne applied to State Farm for statutory accident benefits. State Farm became the insurer responsible for paying him benefits pursuant to s. 256(2) of the Insurance Act and the Statutory Accident Benefits Schedule.
[11] State Farm sought indemnification from Belair pursuant to s. 275 of the Insurance Act. Belair declined. The dispute was referred for arbitration as provided for in s. 275(4).
The Standard of Review
[12] In Intact Insurance company v. Allstate Insurance Company of Canada, 2016 ONCA 609, the Ontario Court of Appeal held that the administrative law framework must be applied to determine the standard of review on an appeal from an insurance arbitration with the result that, generally, decisions rendered by non-judicial decision makers should be reviewed under that framework, even when that review is styled as an appeal. The court went on to hold as follows:
[53] In general, an appeal to the Superior Court from an insurance arbitration regarding a priority dispute will engage questions of mixed fact and law that must be reviewed for reasonableness. Even if the appeal involved an extricable question of law regarding SABS, a reasonableness standard of review will still generally apply. In the unlikely scenario that the issue before the insurance arbitrator is an “exceptional” question (one of jurisdiction, a constitutional question, or a general question of law that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized area or expertise), a correctness standard of review may be applicable.
[13] For the purposes of determining the standard of review, I can see no reason to distinguish between a priority dispute and a loss transfer dispute. The question before the arbitrator was not “exceptional”. Accordingly, the arbitrator’s decision is to be reviewed on a standard of reasonableness.
[14] As held in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process but is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.
The Issues Defined
[15] In the circumstances of this case, s. 275(2) of the Insurance Act requires that indemnification among insurers be made according to the respective degree of fault of each insurer’s insured as determined under the Fault Determination Rules (“FDRs”).
[16] Three of the FDRs are of particular importance in this case.
[17] The first is rule 12(5), a rule that applies when automobile “A” collides with automobile “B”, the automobiles are travelling in opposite directions in adjacent lanes, and automobile “B” turns left in the path of automobile “A”. When this rule applies, the driver of automobile “B” is 100 per cent at fault for the incident.
[18] The second is rule 13(2), a rule that applies with respect to an incident that occurs at an intersection that does not have traffic signals or traffic signs. When this rule applies, if automobile “A” enters the intersection before automobile “B”, the driver of automobile “B” is 100 per cent at fault for the incident.
[19] The third is rule 4(2). It provides that if two rules apply with respect to an incident involving two automobiles and if under one rule the insured is 100 per cent at fault and under the other the insured is not at fault for the incident, the insured shall be deemed to be 50 per cent at fault for the incident.
[20] At issue before me is whether it was reasonable for the arbitrator to find that rule 13(2) did not apply in the facts of this case. If it was not reasonable for her to have come to this conclusion each insured would be 50 per cent at fault for the incident and State Farm would be entitled to indemnification of only half the benefits it has paid to or for its insured.
The Decision of the Arbitrator
[21] The arbitrator held that the incident occurred at an intersection as required by Rule 13. However, she determined that Rule 13 only applies to incidents that occur when vehicles are approaching the intersection from intersecting highways. That is, she found that Rule 13 does not apply to vehicles entering an intersection from adjacent lanes travelling in opposite directions as occurred in this case.
[22] She provided three main reasons for her finding: Firstly, that parallel provisions in the FDRs must be read consistently and in her view it would make little sense to have both Rules 12 and 13 deal with the same factual scenario of two vehicles travelling in adjacent lanes meeting in an intersection. Secondly, she noted that rule 13(3) makes reference to “automobile A being to the right of automobile B” and determined that for this rule to be consistent with the remainder of Rule 13 the rule could only apply to vehicles entering an uncontrolled intersection from intersecting roads. Thirdly, she found that to hold otherwise would result in: “One rule allocating 100% in favour of the left turning driver irrespective of his or her actions and the other allocating 100% against the left turning driver. Such an interpretation does not in my view meet the legislative scheme and expedient manner of determining fault between 2 insurers.”
[23] With respect to her finding that the scene of the incident amounted to an intersection as required by Rule 13, the arbitrator determined that she was not bound by the definition of intersection contained in the Highway Traffic Act. She held that although the definition of both highway and intersection under the Highway Traffic Act can be considered in determining the meaning of intersection under the FDRs, they are not determinative in every case, and in the circumstances of this case although Burleigh Private is a private road it provides access to numerous houses on a daily basis and that a member of the public looking at a photograph of the area where the incident took place would consider it to be an intersection.
Applicable Legal Principles
[24] The issue on this appeal is fundamentally one of statutory interpretation. In State Farm Mutual Automobile Insurance Company v. Old Republic Insurance Company of Canada, 2015 ONCA 699, the Ontario Court of Appeal provided the following concise summary of the applicable principles:
[67] The modern approach to statutory interpretation requires that the words of a statute be read “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: see Rizzo & Rizzo Shoes Ltd. (Re), [1988] 1 S.C.R. 27 at para. 21; quoting from Elmer Driedger, Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983) at 87.
[68] The rules governing statutory interpretation apply equally to regulations. Importantly, a regulation must be read in the context of the enabling Act, having regard to the purpose of the enabling provisions: Brystol-Myers Squibb Co. v. Canada (Attorney General), 2005 SCC 26, [2005] 1 S.C.R. 533, at paras. 37-38.
[25] One of the purposes of the FDRs is to provide an expedient and summary method by which, in certain circumstances, one insurer is allowed to obtain indemnification from another insurer for payments made to an insured. It was explained as follows in Jevco Insurance Co. v. Canadian General Insurance Co., (1993), 14 O.R. (3d) 545, at p. 545:
The scheme of the legislation, under s. 275 of the Insurance Act and companion regulations, is to provide for an expedient and summary method of reimbursing the first-party insurer for payment of no-fault benefits from the second-party insurer whose insured was fully or partially at fault for the accident. The fault of the insured is to be determined strictly in accordance with the fault determination rules, prescribed by regulation, and any determination of fault in litigation between the injured plaintiff and the alleged tortfeasor is irrelevant.
[26] The underlying purpose of the legislation is to spread the load among insurers in a gross and somewhat arbitrary fashion favouring expedition and economy over finite exactitude [see Jevco Insurance Co. v. York Fire & Casualty Co., (1996), 27 O.R. (3d) 483, at p. 486].
Analysis
[27] For the reasons that follow I am of the view that the decision of the arbitrator was both reasonable and correct.
[28] When automobiles are travelling in the same or opposite directions to one another, Rules 6 through 12 of the FDRs provide for the determination of fault when an incident arises between them. Among these scenarios is rule 12(5) as summarized above. As the arbitrator found, this rule would clearly cover the situation in the present case where the two vehicles approach an uncontrolled intersection from opposite directions.
[29] It makes little sense for there to be another rule dealing with precisely the same factual scenario. It makes much more sense that Rule 13 was intended to apply to a different factual scenario.
[30] Separate rules are required for incidents arising at an intersection because an intersection invites the interaction of vehicles that are not travelling in the same or opposite directions.
[31] Under the heading “Rules for Automobiles in an Intersection”, Rules 13 through 15 provide for fault determination at three types of intersection: (1) Those with no traffic signals or traffic signs (which I will refer to as “uncontrolled intersections”). (2) Those with traffic signs. (3) Those with traffic signals (those with traffic signs or traffic signals I will refer to as “controlled intersections”).
[32] Fault at uncontrolled intersections is allocated according to the time of entry of each vehicle into the intersection. Fault at controlled intersections is allocated according to compliance with the applicable traffic controls.
[33] There is no principled reason why an incident which occurs between two vehicles travelling in opposite directions in adjacent lanes at an uncontrolled intersection should have fault allocated differently than an incident occurring between two vehicles travelling in opposite directions in adjacent lanes at other than an intersection. There is no new factor introduced by the uncontrolled intersection that should or would impact the fault analysis.
[34] Furthermore, the application of Rule 13 to vehicles travelling in opposite directions at an uncontrolled intersection could lead to absurd results. For example, if automobile “A” enters the intersection first but completely on the wrong side of the road and thereby causes a head-on collision with automobile “B”, fault would be shared between the two drivers under Rule 13(2) and Rule 12(4) despite an obvious lack of fault on the part of the driver of automobile “B”. It is a result that could not have been intended by the rules notwithstanding their use as a “rough and ready” means of fault determination.
[35] The appellant also argued that the arbitrator’s interpretation of Rule 13 would necessarily limit the application of Rules 14 and 15 to incidents arising between vehicles travelling on intersecting roads and must therefore be both incorrect and unreasonable. I do not share that view. To begin with, the arbitrator’s decision was specifically limited to Rule 13. Secondly, Rules 14 and 15 speak to an entirely new and different set of circumstances than does Rule 13 or 12(5). Specifically, they refer to controlled intersections and provide for determination of fault on the basis of compliance with those controls. With the introduction of controls at an intersections there is a new factor requiring different behaviour on the part of approaching drivers regardless of the direction from which they approach. There is nothing in Rules 14 and 15 or in the purpose of those rules that would restrict them to vehicles which meet on intersecting roads.
[36] Finally, the parties also directed argument to the issue of whether the incident took place at an “intersection”. Given my finding that Rule 13 does not apply to the circumstances of this case in any event, I need not determine that issue.
Conclusion
[37] The appeal is dismissed. In the event the parties are unable to agree on costs they may make written submissions to me within 45 days, limited to three pages each plus attachments.