Court File and Parties

COURT FILE NO.: CV-17-572332 DATE: 20180913 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Travelers Insurance Company, Appellant AND: CAA Insurance Company, Respondent

BEFORE: Pollak J.

COUNSEL: Daniel Strigberger and Julianne Brimfield, for the Appellant Jamie R. Pollack and Adina Strom, for the Respondent

HEARD: June 19, 2018

Endorsement

[1] On February 27, 2017, an arbitrator decided that Travelers Insurance Company (“Travelers”) was the priority insurer for benefits flowing from an accident in Nunavut. Travelers appeals that decision. For the reasons that follow, I dismiss the appeal.

[2] Patricia Soloway applied to her insurer, the Respondent, CAA Insurance Company (“CAA”), for Ontario statutory accident benefits for her injuries from a car accident in Nunavut. CAA has been paying Ontario accident benefits to Ms. Soloway since the accident. CAA claimed that Travelers paid Ms. Soloway’s Ontario accident benefits and it initiated an arbitration. The arbitrator held that Travelers had priority for payment of Ms. Soloway’s Ontario accident benefits claims under Travelers’ Nunavut policy.

[3] In Ontario, section 268(2) of the Insurance Act, R.S.O. 1990, c. I.8 (the “Act”), addresses the priority for payment of benefits. The relevant priority dispute resolution provisions are in O. Reg. 283/95, Disputes Between Insurers.

[4] The arbitrator held that because Travelers was an Ontario insurer, had filed a Power of Attorney and Undertaking (“PAU”) in Ontario, and was the insurer of the car involved in an accident in Nunavut, it was therefore bound by the priority laws in the Act and is required to pay Ontario benefits under its Nunavut policy.

[5] On this Appeal, Travelers submits that the arbitrator was first required to determine whether there was Ontario accident benefits coverage under its Nunavut policy before proceeding with an analysis of the priority issue. Travelers alleges that there is a jurisdictional issue with respect to the question of coverage. However, it is submitted that the arbitrator decided this issue in the context of “Ontario’s priority scheme.” Travelers submits that the issue is to determine if there was Ontario accident benefits coverage under the Nunavut policy. If so, the claimant would have recourse against Travelers for the payment of Ontario benefits. However, if there were no Ontario coverage, the claimant would have no rights to benefits and Ontario’s priority scheme would not apply. In other words, if there were no coverage under the Travelers policy, it would not be liable for Ontario accident benefits. It is CAA’s position that this analysis is contrary to the way the Act requires that priority disputes are to be decided.

[6] Travelers submits that the proper coverage analysis requires that the arbitrator decide whether the claimant is an “insured person” under the relevant policy. Only where it is found that there is coverage as an insured person should the arbitrator then determine priority pursuant to s. 268(2) of the Act.

[7] The arbitrator instead found there was coverage because Travelers is an Ontario insurer with presence in the province and a head office in Toronto, and because Travelers provided a PAU in Ontario to be bound by the laws of Ontario, provided that the relevant accident happens in Ontario.

[8] Travelers argues that the arbitrator erred and made an incorrect and unreasonable decision because he applied Ontario laws to find Ontario benefits coverage under a policy that did not provide Ontario benefits at the time of the accident. Travelers argues that the arbitrator erred by finding that the claimant was an “insured person” under the Travelers Nunavut policy, using the definition in the Act.

[9] Further, Travelers submits that the arbitrator also erred when he held that the effect of the PAU signed by Travelers in Ontario was to make the Nunavut policy a “made in Ontario” policy.

[10] Travelers submits that these errors have wide ranging implications in a variety of legal contexts. The legal interpretation of the PAU affects insurers in other provinces and the United States. For example, an insurer in Texas with some presence in Ontario might have to pay catastrophic-level Ontario accident benefits arising from an accident in Texas involving a Texas policy and vehicles registered or licensed in Texas. It may result in insurers having to fund Ontario‑level benefits where there is absolutely no connection between an accident and Ontario.

[11] CAA points out that this case involved an accident that occurred in Canada, with an insured person who was a resident of Ontario and, most importantly, an insurer who is both licensed to undertake the sale of automobile insurance in Ontario and a signatory to the PAU. It cannot be said that there is “no connection” to Ontario. I agree with this submission.

[12] Travelers submits that the appropriate standard of review is correctness. CAA disputes the standard of review and relies on the case of Intact Insurance Company v. Allstate Insurance Company of Canada, 2016 ONCA 609, wherein LaForme J.A. held that a reasonableness standard should apply to appeals of private arbitration decisions because of the presumption that the arbitrator will have relevant expertise, the jurisprudence regarding non-judicial decision makers, and the limited scope of appellate review of arbitral decisions. In the case of The Dominion of Canada General Insurance Company v. State Farm Mutual Insurance Company, 2018 ONCA 101, the Court of Appeal for Ontario repeated that the standard of review applicable to appeals from insurance arbitral decisions involving priority disputes under the Statutory Accident Benefits Schedule (“SABS”) is reasonableness.

[13] I agree with CAA and follow the guidance offered by our Court of Appeal in the cases above. I find that the standard of review in this case is one of reasonableness.

[14] CAA submits that because Travelers is both a signatory to the PAU and an insurer licensed to undertake automobile insurance in Ontario, the case of Primmum Insurance Company v. Allstate Insurance Company, 2010 ONSC 986 [Primmum], is directly applicable to this appeal. In that case, Cameron J. followed the decision of Newbould J. in Royal & SunAlliance Insurance Company of Canada v. Wawanesa Mutual Insurance Company (2006), 84 O.R. (3d) 449 (ON SC) [Royal & SunAlliance], and of Binnie J. in Unifund Assurance Company of Canada v. Insurance Corporation of British Columbia, 2003 SCC 40. Cameron J. observed at paras. 20 and 28 of Primmum:

If both of the insurers are registered in an, carry on business in Ontario, they may claim loss transfer, even if the accident occurred in a non-loss transfer jurisdiction such as Vermont

In the Insurance Act, Allstate is an “insurer” under s. 1 and it issues “contracts” because it is licensed to sell insurance in Ontario under s. 224(1)(a).

[15] In the present case, Travelers is both an insurer licensed to undertake contracts of insurance in Ontario and a signatory to the PAU. It is the position of CAA that all of Travelers’ arguments with respect to the inapplicability of the Act and the overall insurance scheme not applying to the accident must fail, as they all ignore the crucial fact that Travelers is an insurer licensed to undertake automobile insurance in Ontario and is a signatory to the PAU. CAA submits that the decision of the arbitrator was reasonable as it fell within a reasonable range of outcomes given a plain reading of the Act and the PAU.

[16] With respect to Travelers’ argument that the provisions do not apply to accidents outside of Ontario, CAA submits that as Travelers is a signatory to the PAU and maintains a license to undertake insurance in Ontario, it has agreed to forego its ability to claim that the Act is restricted to the province in which the policy was written, and/or the accident takes place. The PAU specifically states that the insurer is not to advance a defence to any claim that would not be available in Ontario.

The arbitrator relied on the case of Healy v. Interboro Mutual Indemnity Insurance Company (1999), 44 O.R. (3d) 404 (Ont CA) [Interboro], which involved an accident that occurred in Ontario, involving an injured party who was resident in New York State. Goudge J.A. held that Interboro, a New York insurer and signatory to the PAU, was required to pay Ontario statutory accident benefits to the claimant. The arbitrator relied on Interboro to find that a participating insurer under the PAU agrees to be bound by the law concerning compulsory automobile insurance coverage of the province where the action against is brought rather than the automobile insurance coverage of the state or province where its policy is issued.

[17] Travelers relies on the case of Young v. Ontario (Minister of Finance) (2003), 68 O.R. (3d) 321 (Ont CA) [Young], where the claimant’s insurer was not a signatory to the PAU and there was also no evidence to find that the insurance company was licensed to write automobile insurance in Ontario. Because the claimant’s insurer in Young was not an insurer licensed to write automobile insurance in Ontario, its contract of insurance did not fall within the definition of “contract” pursuant to s. 224 of the Act, and it could not have been a licensed “insurer.” Young is distinguishable from the present case. Travelers is both an insurer that is licensed to undertake automobile insurance in Ontario and signatory to the PAU. Applying Cameron J.’s reasoning from the Primmum case, this would result in Travelers being considered an insurer as contemplated by the Act.

[18] It is the position of CAA that the arbitrator was required to find who was the priority insurer based on the facts, followed by an analysis of whether Ontario benefits applied, to be determined on whether or not the PAU applied and whether the Appellant was an Ontario insurer as contemplated by the Act.

[19] Travelers submits that the PAU imposes obligations on an insurance company only where the accident occurred. CAA, however, replies that such a defence would allow it to raise a defence to a claim in Ontario that its policy did not provide Ontario accident benefits coverage, because the accident occurred in Nunavut ignoring the specific language of the PAU, which expressly prohibits signatories from setting up any defence that does not conform to the laws of Ontario. CAA further submits that such interpretation of the PAU ignores the definition of “contract” in s. 224(1) of the Act, which specifically includes a contract of insurance undertaken by an insurer that is licensed to undertake automobile insurance in Ontario, and the definition of “insurer” from s. 1 of the Act.

[20] Finally, this interpretation is contrary to prior case law that found that as a signatory to the PAU, Ontario statutory accident benefits apply to accidents that occur outside of Ontario, as long as they are within the territorial jurisdiction stated in the PAU. The accident in this case is within the territorial jurisdiction of the PAU.

[21] CAA also relies on Royal & SunAlliance for the proposition that for the purpose of applying Ontario law in respect of loss transfer, the key question is whether the insurers involved are insurers within the meaning of the Ontario legislation. Newbould J. held that there would be no purpose for the law of Vermont to settle a dispute between two Ontario insurers arising from a claim made under the Act. CAA submits that in making the determination that the location of the accident was irrelevant, the court held that where insurers in an action are Ontario insurers, they are bound by Ontario law.

[22] CAA submits that when the PAU is read with ss. 224(1) and 1 of the Act, the only correct decision for the arbitrator to make is that Travelers is an Ontario insurer for the purposes of the priority dispute and that it is therefore liable for the accident benefits limits. It is precluded from raising a defence that it does not have liability for payment of these benefits because the accident did not occur in Ontario.

[23] CAA summarizes its argument that as Travelers is an insurer licensed to undertake automobile insurance in Ontario, the definition of a contract in the Act applies. Therefore, its contract of insurance is deemed to provide the statutory benefit set out in the SABS. Further, the language of the PAU expressly forbids Travelers from claiming a defence to any claim the SABS raises. On this basis, the arbitrator’s finding that Travelers, as an insurer who undertakes automobile insurance in Ontario and a signatory to the PAU, is considered an “Ontario insurer” for the purpose of this dispute and is therefore liable to Ontario accident benefits, is both correct and reasonable.

[24] I agree with all of these submissions of CAA and agree that the arbitrator’s decision was reasonable based on the interpretation of the PAU and the Act. For these reasons, the appeal is dismissed.

Costs

[25] If the parties are unable to agree on costs, they may make brief written submissions to me no longer than three pages in length. The Respondent’s submissions are to be delivered by 12:00 p.m. on September 24, 2018, and the Appellant’s submissions are to be delivered by 12:00 p.m. on October 1, 2018. Any reply submissions are to be delivered by 12:00 p.m. on October 5, 2018.

Pollak J. Date: September 13, 2018