CITATION: Wagner v. Fellows, 2017 ONSC 6979
COURT FILE NO.: CV-12-108188
DATE: 20171205
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tyler Wagner by his Litigation Guardian, Angela Wagner
Plaintiff
– and –
Madison Fellows, Melissa Ley and The Dominion of Canada General Insurance Company
Defendants
COUNSEL:
Raymond A.D. Watt and Melissa J. Miles, for the Plaintiff
Stan J. Sokol, for the Defendant, Madison Fellows
Robert L. Love and Jeremy Ablaza, for the Defendants, Melissa Ley and The Dominion of Canada General Insurance Company
HEARD: November 21, 2017
Reasons for RULING dismissing Motion
MuLLINS J.:
[1] The Minister of Finance (The Minister) sought declaratory relief on behalf of the defendant, Madison Fellows, at the outset of this trial. In essence, the Fund asked the court to preclude the Dominion of Canada General Insurance Company (DOC) from relying on an exclusion in s. 1.8.2 of the Standard-Form Ontario Automobile Policy (OAP 1).
[2] Certain benefits are not payable in respect of an occupant of an automobile who at the time of the accident who knew, or ought reasonably to have known that the driver was operating the automobile without the owner’s consent, pursuant to the provisions of the Insurance Act, R.S.O. 1990, c. I.8, and the regulations governing Statutory Accident Benefits.
[3] The Minister contends that it would be an abuse of process to allow DOC to rely on this exclusion to argue that the plaintiff Tyler Wagner be foreclosed from receiving underinsured/uninsured coverage in circumstances where they settled his claim for accident benefits.
[4] The parties agreed to the following facts for the purposes of this motion seeking declaratory relief:
[5] Tyler Wagner was 15 years old when he was allegedly injured in a single-vehicle accident on April 2, 2011. He was a rear seat passenger in a vehicle operated by 16 year old Madison Fellows. Mr. Fellows was operating a car owned by his mother, Melissa Ley. Mother and son lived together with other family members. Mr. Fellows had a G1 licence. His G1 licence allowed him to drive between the hours of 5:00 a.m. and 12:00 a.m., as long as he had a fully licensed driver in the front passenger seat and he had a blood alcohol level of zero.
[6] Mr. Fellows and Mr. Wagner encountered one another at a party in Keswick on April 1, 2011. After the party, Mr. Fellows went home, obtained a key to his mother’s car, and picked up Mr. Wagner at the latter’s home in Keswick. The two proceeded to pick up two other individuals. The group drove around Keswick, then to Newmarket, to Sutton and retuned to Keswick, though one passenger was returned to her home along the way.
[7] While Mr. Fellows, Mr. Wagner and the other remaining passenger were travelling southbound on Woodbine Avenue, the vehicle left the travelled portion of the roadway and ended up in a field on the west side of the road. In the vicinity of the accident, Woodbine Avenue is straight. It has one lane for travel in each direction and soft gravel shoulders.
[8] Mr. Wagner suffered multiple injuries including fractures to his C5 facet, a tooth, and to his face in the event. He did not have automobile insurance available to him through his family. He applied to and received statutory accident benefits from The Dominion of Canada General Insurance Company, the insurer of the vehicle in which he had been a passenger. DOC paid him medical and rehabilitation benefits. On January 25, 2012, a request was made to DOC on Mr. Wagner’s behalf that the insurer provide ‘an update’ respecting payment of non-earner benefits. DOC delivered an Explanation of Benefits form dated January 30, 2012 advising that in its view, the plaintiff was not entitled to a non-earner benefit because he did not suffer from a complete inability to carry on a normal life as a result of the accident.
[9] Thereafter, Mr. Wagner’s counsel corresponded with the insurer on a number of occasions. On February 22, 2012, DOC advised Mr. Wagner that it was also denying his entitlement to non-earner benefits on a second ground, this being the exclusion in section 31(1)(c) of the Statutory Accident Benefits Schedule, O. Reg. 34/10 (SABS).
[10] The plaintiff invoked the dispute resolution mechanisms prescribed under the Insurance Act by applying for mediation. In that process he asserted an entitlement to non‑earner benefits. There were a number of other benefits in dispute between the parties. When the mediation was unsuccessful, an application for arbitration was filed. In response, DOC advanced the position that Mr. Wagner was not entitled to non-earner benefits on grounds he knew or ought reasonably to have known that he was occupying a vehicle that was being driven without the owner’s consent and had not suffered a complete inability to carry on a normal life as a result of the motor vehicle accident.
[11] In the dispute resolution process he had invoked, the plaintiff advanced claims for medical /rehabilitation benefits in the sum of $3,013.32, attendant care benefits in the sum of $29,262.81 as well for the period from May 22, 2012 onward in the sum of $561.47 per month, and non-earner benefits from October 2, 2011 onward.
[12] In advance of an arbitration hearing scheduled for October 6, 2015, the parties negotiated a full and final settlement of all the plaintiff’s past, present and future claims for Statutory Accident Benefits in consideration of a payment by DOC of $50,000. A Settlement Disclosure Notice in the prescribed form was prepared. This together with a Final Release were delivered to Mr. Wagner.
[13] In the Settlement Disclosure Notice the insurer allocated $12,500 of the $50,000 lump sum to non-earner benefits, $12,500 to attendant care benefits, $7,500 to medical benefits, $7,500 to rehabilitation benefits, and $10,000 to other benefits and expenses.
[14] In an epilogue to the settlement, Plaintiff’s counsel gave notice of a requirement that DOC maintain its firewall between the administration of the plaintiff’s claims for statutory accident benefits and its defence of the plaintiff’s claim for indemnity under the policy holder’s OPCF 44R coverage.
[15] The Settlement Disclosure Notice contains a caution and gives notice to the insured that a cash settlement will permanently end their entitlement to one or more statutory accident benefits. It also advises an insured that the insurer will probably give him or her a release to sign.
[16] Mr. Wagner executed a Full and Final Release he had received together with the Settlement Disclosure Notice through his counsel. By its terms, Mr. Wagner released and discharged the insurer from any and all actions, claims and demands for statutory accident benefits and from all issues, claims, demands and actions that were or could have been the subject of arbitration before the Financial Services Commission of Ontario. The body of the final release referred to an understanding and agreement that the $50,000 payment did not constitute an admission of liability on the part of the releasees. (Emphasis added)
[17] In urging this court to prohibit DOC from relying on the exclusion of overage under Section 1.8 of the OAP for a claimant who knows or ought reasonably to know the vehicle was being used or operated by a person in possession of the automobile without the owner’s consent, the moving parties appeal to the court’s residual discretion to prevent the misuse of procedure, where it would bring the administration of justice into disrepute.
[18] Having allocated a portion of the $50,000.00 paid in settlement to non-earner benefits, submit the moving parties, DOC should be taken to have conceded that the plaintiff was entitled to a non-earner benefit, despite the provision in s. 31(1)(c) of the SABS upon which they had earlier relied. In effect, having conceded his entitlement to the non earner benefit, the insurer has conceded as well that the insured did not know, nor reasonably ought he to have known that the vehicle was not in possession of the driver with consent of the owner. It would countenance an abuse of process to allow the insurer to continue to defend Mr. Wagner’s claim to indemnity for tort damages on a ground they have given up in respect of the accident benefits say the plaintiff and the MVACF in the persona of the Minister of Finance.
[19] Several decisions were cited by the MVACF and the plaintiff, including Andreadis v. Pinto (2009), 2009 CanLII 50220 (ON SC), 98 O.R. (3d) 701 (S.C.J.); The Co-operators General Insurance Co. and The Dominion of Canada General Insurance Co., Re, 2015 CarswellOnt 17313 (Ont. Arbitration). Had DOC intended to contest whether the plaintiff knew or ought reasonably to have known that the vehicle was being operated without consent, it should have done so in the mediation and arbitration process.
[20] Analogies were drawn to cases in which an arbitration ruling followed a criminal conviction for a sexual assault, such as Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.) Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77; Hanna v. Abbott (2006), 2006 CanLII 27865 (ON CA), 82 O.R. (3d) 215 (C.A.); Caci v. MacArthur, 2008 ONCA 750, 93 O.R. (3d) 701, among others.
[21] In response, the defendants ask the court to consider Stinson J’s decision in Anand v. Belanger, 2010 ONSC 2345, 101 O.R. (3d) 630. In that case, damages were sought for a motor vehicle accident. At the time of the accident, the plaintiff was a passenger in a vehicle operated by her son. The at-fault driver, who collided with the plaintiff’s vehicle, was uninsured. The plaintiff’s son and husband both had insurance policies with the same insurer. The plaintiff made application for statutory accident benefits and instituted a tort action. There, as here, the plaintiff had to seek payment from the same insurer for her statutory accident benefits and for indemnity in tort under the provisions of the uninsured coverage provided by the policies. The insurer terminated the plaintiff’s income replacement benefits after 104 weeks contending that she was not suffering from a complete inability to engage in any employment for which she was reasonably suited. The plaintiff served a notice of application for mediation, and commenced an arbitration proceeding. At a settlement conference in advance of the hearing, the parties agreed to settle the plaintiff’s past and future entitlement to income replacement benefits.
[22] In Anand, the court ruled that in light of the express provisions of the release, it was not open to the plaintiff to characterize the settlement of her statutory accident benefit claims as an admission in the tort action.
[23] Stinson J. reasoned that the doctrine of abuse of process should not be applied to prevent an insurer from advancing a full defence in a tort action, particularly because it was mere happenstance that the same insurer was the plaintiff’s statutory accident benefits provider.
[24] As here, A Settlement Dispute Notice and a Full and Final Release was executed. In light of the express provisions of the release document, the court held that the insurer’s payment was not an admission of liability. Having agreed to and benefitted from the terms of the settlement, the plaintiff was not permitted to resile.
[25] The court specifically commented on the circumstances surrounding the payment. Stinson J. found that claims for statutory accident benefits were contextually different from tort claims. An insurer’s decision to compromise in their dispute with the insured over statutory accident benefits was to be viewed in that context and could not be treated as an unqualified admission for tort liability purposes. The arbitration was restricted to statutory accident benefit issues. It was not a comprehensive proceeding in which all of the claims and disputes arising from the motor vehicle collision could be litigated. Only the income replacement benefit to the date of the arbitration were in issue and would have fallen within the scope of an arbitrator’s jurisdiction.
[26] Justice Stinson agreed that judges have an inherent and residual discretion to prevent an abuse of process. Quoting Canam Enterprises Inc. v. Coles, 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 (C.A.) (Goudge J.A. in dissent), affirmed in, 2002 SCC 63, [2002] 3 S.C.R. 307, he described the doctrine of abuse of process as engaging the inherent power of the court to prevent the misuse of its procedure, such as where the litigation is an attempt to re-litigate a claim which has already been determined.
[27] I accept the defendant’s submission that the reasoning applied by Stinson J. in Anand v. Belanger is apropos. (Though I do not share Stinson’s J’s view that the doctrine of utmost good faith applies to this particular aspect of the relationship of insured to insurer and vice versa.)
[28] I do not accept that it is appropriate to characterize DOC’s conduct here as a concession or an admission of liability. The insurer negotiated and paid a lump sum settlement in exchange for a release from its potential liability to pay more and further statutory accident benefits. When all of the documents before this court are reviewed, it is clear that the insurer settled the plaintiff’s claim for statutory accident benefits via negotiations which were intended to be without prejudice to the insurer’s legal liability. The release explicitly states that the settlement was without admission of liability. The insurer was required to maintain a firewall.
[29] The mere circumstance of an insurer choosing to settle a claim ought not to be taken to constitute an admission of a legal liability to pay, other than to pay the amount agreed upon in the settlement. To hold otherwise would fly in the face of the wording of the settlement documents and lay waste to the concept of settlement privilege. Day in, day out, under the auspices of our courts at pre-trials and in the practise of personal injury law, without prejudice settlements of claims to tort damages and accident benefits are made and are to be encouraged and protected.
[30] There was no litigation on the merits of the applicability of the exclusion relied upon by this insurer, such that this proceeding could reasonably be perceived as an attempt to re-litigate the issue. The circumstances are not at all comparable to those in the cases cited by the moving parties.
[31] Therefore, I conclude there is no abuse of process arising from DOC’s reliance on the exclusion in s. 1.8.2 of OAP 1 and in allowing for a determination on the merits in this proceeding as to whether the plaintiff knew or ought to have known that the motor vehicle in which he was a passenger was being operated without the consent of the owner.
Justice A.M. Mullins
Released: December 5, 2017
CITATION: Wagner v. Fellows, 2017 ONSC 6979
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tyler Wagner by his Litigation Guardian, Angela Wagner
Plaintiff
– and –
Madison Fellows, Melissa Ley and The Dominion of Canada General Insurance Company
Defendants
REASONS FOR RULING DISMISSING MOTION
Justice A.M. Mullins
Released: December 5, 2017