COURT FILE NO.: CV-17-583194 DATE: 20180808 ONTARIO SUPERIOR COURT OF JUSTICE
IN THE MATTER OF an Arbitration under the Arbitration Act, 1991, S.O. 1991, c. 17, the Insurance Act R.S.O 1990. C. I.8, as amended, Ontario Regulation 283/95, and the Motor Vehicle Accident Claims Fund Act, R.S.O. 1990 c. M. 41
BETWEEN:
HER MAJESTY THE QUEEN IN THE RIGHT OF ONTARIO, as represented by the MINISTER OF FINANCE (“THE MOTOR VEHICLE ACCIDENT CLAIMS FUND”) Applicant (Respondent on Appeal) – and – ECHELON GENERAL INSURANCE COMPANY Respondent (Appellant on Appeal)
COUNSEL: Marie Sydney, for the Applicant (Respondent on Appeal) Jamie R. Pollack for the Respondent (Appellant on Appeal)
HEARD: June 11, 2018
LEDERER J.
INTRODUCTION
[1] This is an appeal from the decision of an arbitrator. The decision is dated August 29, 2017. It determined that the Motor Vehicle Accident Claims Fund (hereinafter the “Fund”) was entitled to step away from its acceptance that it was the priority insurer and required to cover the accident benefits claimed by Anne Louise Barnes as a result of an accident that occurred when she was the passenger on a snowmobile. The arbitrator issued a decision which was comprehensive in its approach. It considered the problem from a number of perspectives. To my mind the solution is straight forward. The applicable regulation sets the Fund apart from private insurers. The arbitrator found that the appellant, Echelon General Insurance Company (hereinafter “Echelon”) failed to undertake the investigation necessary before it could properly notify the Fund of its desire to dispute priority. In the absence of proper notice there was no dispute that could be subject to arbitration. There was no need for the arbitrator to go further.
FACTS
[2] On January 3, 2012, Anne Louise Barnes was a passenger on a snowmobile owned and operated by her boyfriend, Frazer Bird. Anne Louise Barnes was thrown off the snowmobile and sustained injuries. At the time Frazer Bird had an automobile insurance policy held by Echelon. On January 23, 2012, Anne Louise Barnes applied to Echelon for statutory accident benefits. Echelon utilized the services of Crawford and Company, Canada Inc. (hereinafter “Crawford Adjusters”) to adjust the claim. The snowmobile was not a described vehicle under the policy. However, neither Echelon nor Crawford Adjusters turned their minds to the section of the policy which described “other automobiles”. It provided accident benefits coverage for accidents involving the snowmobile.
[3] By Notice to Applicant of Dispute Between Insurers, dated February 7, 2012, Echelon provided notice to the Fund of a priority dispute. Claimspro is an independent adjusting firm that acted for the Fund in relation to the claim. Crawford Adjusters, on behalf of Echelon, advised Claimspro, and through it the Fund, that the snowmobile was uninsured. Echelon asked the Fund to accept priority, that is to take over responsibility for paying accident benefits to Anne Louise Barnes. The Fund accepted that the snowmobile was uninsured and took up the responsibility to pay the benefits.
[4] Later the Fund realized that, in fact, pursuant to the “other automobiles” section of the policy the snowmobile was insured. It asked Echelon to take back responsibility to pay the accident benefits and reimburse the Fund for the payments it had made. Echelon refused. It is that refusal which gave rise to the dispute. The Fund commenced an arbitration under the provisions of Ontario Regulation 283/95. The Regulation mandates that disputes about who is required to pay benefits must be decided by private arbitration. [^1] There was one. In a decision dated August 29, 2017, the arbitrator held that the Fund was permitted to withdraw from its acceptance of priority and that it was entitled to restitution from Echelon for any monies it had paid to Echelon and any monies paid to or on behalf of Anne Louise Barnes on account of her statutory accident benefits.
[5] This appeal is from that determination.
JURISDICTION OF THE COURT
[6] In furtherance of the arbitration, the parties signed an arbitration agreement. The agreement provided a right to appeal the decision of the arbitrator on a point of law or mixed fact and law. The appeal is to a single judge of the Superior Court of Ontario. [^2] It is on this foundation that I assume jurisdiction.
STANDARD OF REVIEW
[7] Over recent times the standard of review applicable to arbitration decisions made in the context of priority disputes has evolved. In Oxford Mutual Insurance Co. v. Co-operators General Insurance Co. [^3] the Court of Appeal held that the applicable standard or review of decisions by arbitrators relating to questions of law was correctness. In the now seminal case of Dunsmuir v. New Brunswick [^4] the Supreme Court of Canada confirmed that for questions of law this was the standard to be applied. In Intact Insurance Co. v. Old Republic Insurance Co., [^5] a decision of this court, it was noted that there was a long line of cases which dealt with the standard of review from arbitral decisions. In that case it was strongly suggested that the standard of review applicable to insurance priority disputes was, as with questions of law in Oxford Mutual Insurance and Dunsmuir, correctness. This view has been displaced. In Intact Insurance Co. v. Allstate Insurance Co. of Canada [^6] the standard of review of a priority decision was held by the Ontario Court of Appeal to be reasonableness. This is so even if the appeal involves a question of law regarding the Statutory Accident Benefits Schedule (colloquially “SABS”). Subsequent jurisprudence has interpreted reasonableness as a presumptive standard of review of a decision that engages a question of law by an arbitrator considering SABS. There are circumstances where the presumptive standard may be set aside in favour of the non-deferential standard, being correctness. This occurs where there is an exceptional question of law: a question 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 of expertise.
[8] The appellant submits that this appeal raises general questions of law to which the exception applies. These questions are said to be beyond the scope of what the appellant refers to as a “standard SABS arbitral decision” [^7] Counsel for Echelon is of the view that the decision of the arbitrator ignores and steps away from accepted principles, namely that an insurer who has acknowledged that it is the priority insurer and responsible for the payment of a SABS claim is unable to resile from that acceptance. From this foundation Echelon takes the position that, in this case, the appropriate standard of review is correctness. For reasons that will become apparent, I do not agree. It is the presumptive standard of review, (reasonableness) that applies.
O. REG. 283/95 AND THE FUND
[9] As its title implies (“Dispute Between Insurers”) this regulation governs disputes as to which insurer has the responsibility to pay a SABS claim:
All disputes as to which insurer is required to pay benefits under section 268 of the Act shall be settled in accordance with this Regulation. [^8]
[10] The Fund is specifically identified in the definition section that introduces the Regulation:
“Fund” means the Motor Vehicle Accident Claims Fund continued under subsection 2 (1) of the Motor Vehicle Accident Claims Act [^9]
[11] But is it an “Insurer”? Section 2.1(8) of the Regulation makes clear that for the purposes of the preceding subsection it is not:
2.1(8) In subsection (7), “insurer” does not include the Fund.
[12] Subsection 7 separates the Fund from private insurers who have made contracts to provide insurance. The Fund is to be reimbursed by any insurer for fees and administrative costs of the Fund that are incurred as a result of non-compliance with the directives of the regulation. The Fund is exempt from having to pay such costs to any private insurer with which it may have such a dispute:
2.1(7) An insurer that fails to comply with this section shall reimburse the Fund or another insurer for any legal fees, adjuster’s fees, administrative costs and disbursements that are reasonably incurred by the Fund or other insurer as a result of the non-compliance.
[13] This represents a separate treatment of the Fund with respect to an explicit obligation. What about the remainder of the operative clauses of the Regulation? Is the Fund to be treated in the same manner as a private insurer? The regulation does not define “insurer”. There is no need. The regulation was promulgated under the authority of the Insurance Act. Its definitions apply to the regulation. They include a definition of “insurer”:
“insurer” means the person who undertakes or agrees or offers to undertake a contract [^10]
[14] The Fund is not an “insurer”. The treatment of the Fund as other than a private insurer is confirmed by the definition of insurer in its founding legislation, the Motor Vehicle Accident Claims Fund Act. [^11] It confirms that the definition provided in the Insurance Act when considering the standing of the Fund:
In this section, “insurer” means an insurer as defined in the Insurance Act. [^12]
[15] The purpose of the Fund is to provide protection to those involved in an accident with an uninsured driver or vehicle:
The Motor Vehicle Accident Claims Fund (MVACF) is considered to be the "payer of last resort" as it provides compensation to people injured in automobile accidents when no automobile insurance exists to respond to the claim. [^13]
[16] It is funded through the assessment of insurers [^14] with the recognition that it may be subsidized by the provincial government. [^15]
[17] While the Fund is not an insurer as defined in the legislation, it does provide coverage in the absence of an applicable insurance contract. It may become engaged in priority disputes as it has in this case. When it does it receives different and particular treatment in the regulation.
[18] If an insurer wishes to dispute its obligation to pay statutory accident benefits it is required, in the normal course, to notify any insurer it believes to be the proper payee of the benefits:
- (1) No insurer may dispute its obligation to pay benefits under section 268 of the Act unless it gives written notice within 90 days of receipt of a completed application for benefits to every insurer who it claims is required to pay under that section. [^16]
[19] I say in the normal course because there can be exceptions to the 90 day limitation:
(2) An insurer may give notice after the 90-day period if, (a) 90 days was not a sufficient period of time to make a determination that another insurer or insurers is liable under section 268 of the Act; and (b) the insurer made the reasonable investigations necessary to determine if another insurer was liable within the 90-day period. [^17]
[20] These clauses do not apply to the Fund. It is not an “insurer”. Its participation must be and is governed by separate provisions in the regulation. This is the case in respect to both the obligation to provide notice and the exceptions to the 90-day limitation:
(1.1) If the dispute relates to an accident that occurred on or after September 1, 2010, a notice required under subsection (1) must also be given to the Fund if the insurer claims the Fund is required to pay benefits. [^18]
[Emphasis added]
and
(2.1) If the dispute relates to an accident that occurred on or after September 1, 2010, the Fund may give a notice under subsection (1) after the 90-day period and is not required to comply with subsection (2). [^19]
[Emphasis added]
[21] The Fund stands apart. I point out that for all the cases referred to on behalf of Echelon as demonstrating that an insurer, having accepted liability (priority), cannot step away from that acceptance, none concern the involvement of the Fund. They are all disputes between “insurers” save one which has no application to the issues raised by this case.
[22] The case that involves the Fund is T.D. General Insurance Co. v. Ontario (Minister of Finance). [^20] It was a motion for leave to appeal. An order was made that an arbitrator be appointed to determine priority as between T.D. General and the Fund. Motions for leave to appeal were brought by both sides. T.D. General did not contest the appointment of the arbitrator but sought to appeal certain findings of fact the judge hearing the initial application had made. Leave was refused. For its part the Fund appealed the determination ordering it to submit to arbitration. T.D. General had acknowledged its priority but then determined it should not have. The issue put to arbitration was whether T.D. General could retract or resile from the acceptance that it had priority. The judge hearing the motion for leave noted that there was strong obiter support for the position of the Fund that the issue was not one for arbitration. It was for the court to decide if the arbitrator had jurisdiction. Despite this, leave was refused. The issue was not whether the arbitrator had jurisdiction but whether the issue between the parties had been settled. This left open collateral questions such as the possible presence of fraud, misrepresentation or mutual mistake. The case does not determine whether the T.D. General could resile but only whether there was an issue that could be the subject of an arbitration. In the case I am to decide there has been an arbitration. The question is whether the arbitrator erred in the decision he made.
[23] In fairness I point out that the case does refer to the Fund being considered an insurer under O. Reg. 283/95. It may be an insurer in the sense that it may be required to pay. There is nothing to suggest that the unique treatment of the Fund under the regulation was raised or considered.
THE OBLIGATION TO INVESTIGATE: THE PRECONDITION TO A DISPUTE WITH THE FUND
[24] Unlike an insurer, the provision of notice to the Fund is not enough. There is a precondition:
3.1 (1) This section applies to disputes relating to accidents occurring on or after September 1, 2010. (2) Before giving a notice to the Fund under section 3, an insurer must, (a) complete a reasonable investigation to determine if any other insurer or insurers are liable to pay benefits in priority to the Fund; and (b) provide particulars to the Fund of the investigation and the results of the investigation. [^21]
[25] It follows that if no “reasonable investigation” was completed by Echelon the notice of a priority dispute it delivered to the Fund was improper and should not have been the catalyst for the arbitration that was held.
[26] Before the arbitrator, on behalf of the Fund, it was argued that the priority investigation carried out by and on behalf of Echelon was not reasonable. It failed to properly consider the coverage under its own policy. As a result it started a priority dispute proceeding when it ought to have known that it was without merit. The evidence indicated that very early on, after learning of the accident, Echelon began looking into coverage under its policy and determined that the snowmobile was not insured under its policy. Its policy investigation stopped there. On this basis Echelon failed to complete a reasonable coverage investigation by not thoroughly considering other provisions in its policy. It was argued that had a reasonable investigation been completed Echelon would have realized that its policy covered Anne Louise Barnes. The arbitrator agreed with this submission. [^22]
[27] What was the substance of the investigation that drew the arbitrator to this conclusion? On what basis did Echelon decide that the snowmobile on which Anne Louise Barnes was a passenger was not covered by the automobile insurance policy held in the name of Frazer Bird?
[28] The individual adjuster employed by Crawford Adjusters testified before the arbitrator. Her investigation consisted of a conversation with Frazer Bird, a conversation with his mother and a legal opinion obtained from a lawyer. The legal opinion was based on the understanding that the snowmobile was uninsured. This was an understanding the adjuster provided to the lawyer as verbal advice she had received from Echelon. This was confirmed by file notes sent by Crawford Adjusters to Claimspro. There is nothing that demonstrates that, as part of the investigation, the lawyer, the adjuster or whoever provided the verbal advice read the policy. [^23] I have no trouble agreeing with the determination of the arbitrator to the effect that the investigation undertaken by and on behalf of Echelon did not comply with the requirements of O. Reg. 283/95, s. 3.1. Echelon did not complete a reasonable investigation to determine if any other insurer (i.e. Echelon itself) was liable to pay benefits in priority to the Fund.
[29] I return to the question of the standard of review. There is nothing exceptional in this. Neither this initial question nor any of those that follow raise questions of jurisdiction, a constitutional question or a general question of law that is of central importance to the legal system and outside the adjudicator’s specialized area of expertise. This is simply the application of the facts to the requirements of the regulation. As such, it is a question of mixed fact and law. One that is specific to the issue at hand. The following quotation is apposite:
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 involves 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. [^24]
[30] This is not a case where an “unlikely scenario” has appeared. The standard of review is reasonableness. The arbitrator’s determination that the investigation carried out was not complete and failed to comply with requirements of s. 3.1 of O. Reg. 283/95 was reasonable.
[31] This should be the end of the appeal. There was no proper acceptance of priority by the Fund. In short, there was nothing for it to resile from. It’s acceptance of priority was based on incorrect information provided as a result of an incomplete investigation. A circumstance which applies only to the Fund and not to any private insurer. The investigation mandated by section 3.1 of the regulation is to be undertaken when it is the Fund that is to be notified. The onus to undertake a complete investigation is on the insurer providing notice, in this case Echelon. It failed in that responsibility. It would not be appropriate for it to now take advantage of its own failing and avoid the responsibility of paying the statutory accident benefits of Anne Louise Barnes.
[32] Even so Echelon argues that the Fund cannot withdraw from its acceptance of priority. It cites a plethora of cases to advance the proposition. Other than T.D. General Insurance Co. v. Ontario (Minister of Finance) to which I have already referred none involve the Fund and the treatment it receives in the application of O. Reg. 283/95. Counsel for Echelon makes special reference to State Farm Mutual Automobile Insurance Co. v. Ontario (Minister of Finance) [^25] and to the following quotation:
The Regulation sets out in precise and specific terms a scheme for resolving disputes between insurers. Insurers are entitled to assume and rely upon the requirement for compliance with those provisions. Insurers subject to this Regulation are sophisticated litigants who deal with these disputes on a daily basis. The scheme applies to a specific type of dispute involving a limited number of parties who find themselves regularly involved in disputes with each other. In this context, it seems to me that clarity and certainty of application are of primary concern. Insurers need to make appropriate decisions with respect to conducting investigations, establishing reserves and maintaining records. Given this regulatory setting, there is little room for creative interpretations or for carving out judicial exceptions designed to deal with the equities of particular cases. [^26]
[33] This sets the terms and policy rationale for the interaction between private insurers involved in a priority dispute. It remains instructive but it is of limited assistance in the case being considered. It was decided in 2002. The amendment to O. Reg. 283/95 which introduced s. 3.1 with its requirement that before notice is given to the Fund the insurer providing notice is obliged to “complete a reasonable investigation” was promulgated years later, in 2010. [^27] The case considered s. 3 of the regulation and the application of the 90-day period it imposes for the service of notice of a priority dispute to be given by one insurer to another. Shortly after an accident, counsel for one insurer wrote to another insurer indicating the view that the latter held the primary policy. It did not serve the requisite notice within the specified period. Thereafter, it learned of “recent rulings which suggested that it was not primarily liable”. [^28] At that point, after the expiry of the 90 day time limit, it gave notice and initiated an arbitration. The Court of Appeal upheld the finding of the Superior Court that “since the [first insurer] had failed to give the required notice, it could not dispute liability.” [^29] It is in that context that the quotation above was written and not in circumstances where the insurer wished to notify the Fund but failed to carry out an appropriate investigation. In the case being decided, the arbitrator, in considering the requirements of s. 3.1 of the regulation did not engage in any “creative interpretations” or “carving out judicial exceptions” as referred to in the quotation. Rather this was a straight forward application of a set of facts to a statutory obligation.
[34] Counsel for Echelon points out that the decision in State Farm Mutual Automobile Insurance Co. has been followed and referred to in both judicial and arbitral decisions. In Motors Insurance Co. v. Co-operators Insurance Co. [^30] an arbitrator considered a priority dispute. The issue was whether the injured party was financially dependent on his father at the time of the accident. If he was, the primary policy was that of his father. If he was not the insurer of the car in which he was riding was responsible. The insurer of the car accepted that it was held priority. Subsequently, it received a letter from a person representing the injured man indicating that as a result of an investigation he had carried out it was his view that the injured man was, at the time of the accident, dependent on his father. The insurer attempted to withdraw its acceptance of priority. The arbitrator found there was an agreement which bound the insurer to its acceptance.
[35] In arriving at his decision the arbitrator repeated the quotation from State Farm Mutual Automobile Insurance Co. included above and followed it with:
While this decision [State Farm Mutual Automobile Insurance Co.] involved and Interpretation [sic] of the section 3 notice provisions of Regulation 283/95, I am of the opinion that the same principles apply to the matter that we are dealing with at this time. The parties have entered into an agreement as to who is to pay the accident benefits. While I accept that in the proper circumstances, an arbitrator can exercise his equitable powers to intervene and allow a party to withdraw from an agreement, this should only occur in the most extreme cases. In a scheme where certainty, simplicity and efficiency are important, allowing one party to revoke a previous agreement simply because they may later become aware of new facts is not desirable. To allow such an approach would be to encourage parties to change their positions each time they obtained new facts, something which is clearly contrary to the Intent [sic] of the Regulation. [^31]
[36] The importance of this quotation does not lie in its restatement that where parties have entered an agreement as to who is to pay, the insurer accepting responsibility should not be able to resile from that agreement. Rather, it is in the recognition that the principle is not absolute. There may be circumstances where the decision-maker could employ equity and allow a party to withdraw: for example if the other insurer acted in bad faith:
I am prepared to accept that I do have the equitable power to allow Motors to withdraw the acceptance of priority, if Cooperators had acted in bad faith. [^32] …
[37] In Motors Insurance Co. the arbitrator was unprepared to find that the other insurer (Cooperators) had acted in such a manner.
[38] This raises the question of whether it is only in extreme circumstances where bad faith or deliberate misrepresentation have misled the insurer into accepting priority that it should be allowed to withdraw. The arbitrator determined that it was not:
To the extent then it is necessary for me to do so, for the reasons I have outlined earlier in this Award, I must respectively disagree with my colleague, Arbitrator Jones’ view of the law, that an insurer is prohibited from withdrawing a priority acceptance only in the extreme situation where there has been bad faith or deliberate misrepresentation on the part of the insurer proposing the priority acceptance. [^33]
It will be observed that I am of the view that there is insufficient legal foundation for such a severe narrowing of the circumstances in which an insurer may withdraw an agreement to accept priority… [^34]
[39] The arbitrator did not have to go that far. He recognized that the amendments to O. Reg 283/95 made in 2010 which outline the separate treatment of the Fund are determinative:
…As I have emphasized, the September, 2010 amendments to the priority dispute regulation place a positive obligation on an insurer who wishes to serve an NDBI on HMQ [the Fund] not only to conduct a reasonable investigation, but to provide the particulars and the results of that investigation to HMQ before serving the NDBI. In my opinion, certainly in cases involving HMQ, the “bad faith” and “deliberate misrepresentation” analysis as it may relate to what documentation/information has or has not been provided to HMQ has no application after the September, 2010 priority dispute regulation amendments, if indeed it ever had appropriate application for this kind of an issue in a priority dispute. [^35]
[40] It was reasonable for the arbitrator to come to this conclusion. The amendments created an obligation. Prior to notifying the Fund an insurer must complete a reasonable investigation and provide the results to the Fund. If this has not been done the notice is not valid and cannot support any arbitration that follows. If it were otherwise, an unsatisfactory investigation would advantage the party obliged to “complete a reasonable investigation” for not doing so. If the Fund accepts the notice and priority there would be no recourse. This could encourage sloppy investigations. Why not run the risk? Perhaps the Fund will not look carefully enough and accept responsibility when it should not.
[41] Nonetheless, the arbitrator continued. He did so on the understanding that the ability to withdraw was not dependant on extreme circumstances such as the presence of bad faith or deliberate misrepresentation. He found Echelon and the Fund had both made the same “honest mistake” in coming to the erroneous conclusion concerning priority [^36] and on that foundation applied the principles of equity:
For the reasons I have outlined, in my opinion it is appropriate to apply principles of equity, or, if necessary, principles of contract law in deciding whether HMQ should be permitted to withdraw its acceptance of priority. [^37]
[42] By going further the arbitrator has travelled where he did not need to go. The case is not determined by the presence or absence of the right to withdraw for reasons less than bad faith or deliberate misrepresentation. It is because without completing a reasonable investigation there could be no proper notice and no arbitration. The arbitration was void ab initio (invalid from the outset). The question of the import of any mutual mistake is not pertinent. The analysis is complete without going there. The further considerations of the arbitrator were unnecessary and to some extent misleading. Issues of equity and contract do not arise.
[43] Based on the finding that there was a mistake of fact, the arbitrator went on to consider restitution:
It is also my view that I need go no further than to consider the court’s application of the equitable doctrine of restitution as was done by Justice Pitt in GAN v. State Farm Mutual Automobile Insurance Co. [^38]
[44] In GAN a truck it insured rear-ended a stationary car. This caused a multi-vehicle “chain” collision. State Farm insured a vehicle in the line though not the car directly ahead of the truck insured by GAN. State Farm paid statutory accident benefits to its insured and, pursuant to the loss transfer scheme created by the Insurance Act s. 275, sought indemnity from GAN. GAN accepted the loss transfer and paid approximately $11,000 to State Farm. Later GAN requested return of the money it had paid on the basis that, in making the payment, it had incorrectly applied the Fault Determination Rules prescribed in O. Reg. 688. The matter proceeded to an arbitration. It was determined that GAN was obliged to indemnify State Farm. GAN appealed to the Superior Court. Justice Pitt found that the wrong rule had been relied on. Proper application of the Fault Determination Rules demonstrated that GAN was not required to indemnify State Farm.
[45] The Court went on to consider whether GAN could recover the money it had already paid to State Farm. Justice Pitt determined that the prerequisites for the application of the doctrine of restitution had been satisfied. State Farm was enriched by the mistake; it was at GAN’s expense, and there was no juristic reason for it. The money was paid pursuant to a statutory scheme but in error resulting from a misunderstanding of how the scheme applied.
[46] GAN was relied on by the arbitrator. The Fund agreed to accept priority and paid money to Echelon in error. Echelon was enriched by the mistake. There was no juristic reason to support the enrichment. There was never a question of the Fund actually or potentially having priority for the payment of the statutory accident benefits. On a proper reading of its policy, Echelon always had priority. [^39] In its reliance on the Fund having accepted priority, Echelon had not detrimentally changed its position. Echelon was unjustly enriched. It was required to make restitution.
[47] Echelon is at some pain to demonstrate that GAN cannot be relied on in these circumstances. In its Factum it reviews a number of cases in which the doctrines of estoppel and waiver have been relied on where an insurer has attempted to withdraw from the acceptance of a loss transfer and dispute the claim. [^40] None of these consider the Fund and its treatment under O. Reg, 283/95.
[48] Needless to say, the Fund responds to these submissions. On its behalf, it is said that GAN continues to have application and that that there are cases where the equitable principles of restitution and unjust enrichment have been applied in priority disputes, at least for the purpose of determining what expenses are recoverable by a successful applicant. [^41]
[49] In the circumstances I think it both unwise and inappropriate to determine an issue that has no application to the case at hand. I go no further than to observe that the arbitrator found the “equitable doctrine of restitution” to be applicable and on that basis determined that it was not necessary for him to consider the other legal grounds advanced by or on behalf of the Fund in support of its argument that its acceptance of priority should be set aside and Echelon declared the priority insurer. [^42] On the understanding that he could be found to be in error the arbitrator considered those other grounds. I do not accept that it is necessary or helpful for me to do the same.
[50] The arbitrator indicated that if he was required to go further, he would have found that there was a contract between HMQ (the Fund) and Echelon whereby the former agreed to assume priority for the payment of statutory accident benefits to the claimant. The arbitrator went on to say that he would have found that the contract was void ab initio based on the mutual mistake of the parties that Echelon held no responsibility under its insurance policy. It was the view of the arbitrator that this was a demonstration that both HMQ (the Fund) and Echelon were mistaken about a fundamental assumption going to the root of the contract.
[51] He went on to conclude that the view expressed by Echelon as to the insurance status of the snowmobile was a misrepresentation made to the Fund. The arbitrator repeated that there was no bad faith or intent to deceive but found that the assertion that the snowmobile was uninsured was a misrepresentation that influenced the Fund’s evaluation of the matter. [^43] This being so the arbitrator was prepared to find that Echelon was unable to rely on the contract he found to exist.
[52] As with the question of the applicability of restitution, it is not necessary that the presence or absence of a contract and whether it can be relied on be determined. The question is one of statutory interpretation and the application of the facts to the obligations found in the legislation. In this case the obligation s. 3.1 of O. Reg. 283/95, imposes on an insurer seeking to notify the Fund of a priority dispute. As the arbitrator determined, and as I have confirmed, Echelon did not complete a reasonable investigation. That finding should stand. No priority dispute was properly raised. On that basis, Echelon was and remains the priority insurer. This is appropriate. Echelon’s policy did apply.
[53] The appeal is dismissed.
COSTS
[54] If the parties are unable to agree as to costs, I will consider written submissions on the following terms:
- On behalf of Her Majesty the Queen in Right of Ontario (the Fund) no later than 15 days after the release of these reasons. Such submissions to be no longer than four pages, double spaced not including any Bill of Costs, Costs Outline or case law that may be referred to.
- On behalf of Echelon no later than 10 days thereafter. Such submissions to be no longer than four pages, double spaced not including any Bill of Costs, Costs Outline or case law that may be referred to.
- On behalf of Her Majesty the Queen in Right of Ontario (the Fund), in reply if necessary, no later than 5 days. Such submissions to be no longer than two pages double spaced.
Lederer J.
Released: August 8, 2018
Footnotes
[^1]: O. Reg. 283/95 Disputes between Insurers at s. 7(1) states: If the insurers cannot agree as to who is required to pay benefits, the dispute shall be resolved through an arbitration under the Arbitration Act, 1991 initiated by the insurer paying benefits under section 2 or 2.1 or any other insurer against whom the obligation to pay benefits is claimed. [^2]: The Arbitration Agreement, at s. 6 states: APPEAL The parties expressly reserve the right of automatic appeal to a single Judge in the Superior Court of Justice on issues of law or mixed fact and law. [^3]:, 2006 CarswellOnt 6991, [2006] O.J. No. 4518, [2007] I.L.R. I-4564, 152 A.C.W.S. (3d) 912, 83 O.R. (3d) 591 [^4]: 2008 SCC 9, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, 164 A.C.W.S. (3d) 727, 170 L.A.C. (4th) 1, 291 D.L.R. (4th) 577, 329 N.B.R. (2d) 1, 69 Admin. L.R. (4th) 1 [^5]: 2016 ONSC 3110, 131 O.R. (3d) 485, 266 A.C.W.S. (3d) 458 [^6]: 2016 ONCA 609, [2016] O.J. No.4113, 131 O.R. (3d) 625, 268 A.C.W.S. (3d) 425, 351 O.A.C. 1, 403 D.L.R. (4th) 438 [^7]: Submissions of the Appellant on Appeal at para. 20 [^8]: O. Reg. 283/95, s.1. Section 268 of the Insurance Act R.S.O. 1990, c. I.8 indicates that all insurance contracts are taken to provide statutory accident benefits. It states: Every contract evidenced by a motor vehicle liability policy, including every such contract in force when the Statutory Accident Benefits Schedule is made or amended, shall be deemed to provide for the statutory accident benefits set out in the Schedule and any amendments to the Schedule, subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule. [^9]: Ibid s. 0.1 [^10]: Insurance Act, supra (fn. 8) s. 1 [^11]: R.S.O. 1990, c. M.41 [^12]: Ibid s. 2(12) [^13]: Website: Financial Services Commission of Ontario. The description of the Fund continues: The major functions of MVACF are: * to provide statutory accident benefits directly to persons involved in an automobile accident, who have no recourse to automobile insurance; * to provide compensation for personal injury or property damage to victims involved in an automobile accident with an uninsured or unidentified driver or a stolen vehicle when no liability insurance exists; and * to recover from the owners and drivers of uninsured vehicles monies paid out on their behalf, where legally permissible. [^14]: Motor Vehicle Accident Claims Fund Act, supra (fn. 10) s.2(6): The Lieutenant Governor in Council may assess insurers within a prescribed class of insurers for amounts paid out of the Fund under section 6.1 and for all expenses and expenditures incurred in respect of the Fund in relation to section 6.1. [^15]: Ibid s. 2(3): The Lieutenant Governor in Council, having regard to the condition of the Fund and the amount paid out of the Fund during any period, may direct payment out of the Consolidated Revenue Fund of such an amount as may be considered necessary or advisable to subsidize the Fund. [^16]: O. Reg. 283/95 s. 3(1). [^17]: Ibid s. 3(2) [^18]: Ibid s. 3(1.1) [^19]: Ibid s. 3(2.1) [^20]: 2011 ONSC 401, 199 A.C.W.S. (3d) 1059, 96 C.C.L.I. (4th) 64. [^21]: Ibid s. 3.1 [^22]: Award of Arbitrator Scott W. Densem dated August 29, 2017 at p.16 of 81 [^23]: Transcript of the Arbitration Hearing: Evidence of Natalie Ellen Jane Creith at Q. 384, Q. 426-429, Q. 437-442, Q. 449-458, Q. 465-466. [^24]: Intact Insurance Co. v. Allstate Insurance Co. of Canada, supra (fn.6) at para. 53 [^25]:, [2002] O.J. No. 528, [2002] O.T.C. 400, 112 A.C.W.S. (3d) 145, 155 O.A.C. 238, 58 O.R. (3d) 251 [^26]: Ibid at para. 10 [^27]: O. Reg. 38/10, s. 5. [^28]: State Farm Mutual Automobile Insurance Co. v. Ontario (Minister of Finance), supra (fn. 25) at para. 5 [^29]: Ibid at para. 1 [^30]: 2004 CarswellOnt 10976 [^31]: Ibid at para. 19 [^32]: Ibid at para. 32 [^33]: Award of Arbitrator Scott W. Densem dated August 29, 2017 at p.49 of 81 [^34]: Ibid at p.55 of 81 [^35]: Ibid at p. 44 of 81 [^36]: Ibid at p. 55 of 81 [^37]: Ibid at p.55 of 81 [^38]: Award of Arbitrator Scott W. Densem dated August 29, 2017 at p.55 of 81. GAN v. State Farm Mutual Automobile Insurance Co is cited at, [1999] O.J. No. 4467, [1999] O.T.C. 165, 19 C.C.L.I. (3d) 266, 96A.C.W.S. (3d) 667 [^39]: Ibid (Award of Arbitrator Scott W. Densem) at p. 59 of 81 [^40]: Kingsway General Insurance Co. and Personal Insurance Co., Re, 2006 CarswellOnt 11717, State Farm Mutual Automobile Insurance Co. and Zurich Insurance Co., Re, 2013 CarswellOnt 19275, Motors Insurance Corp. v. Old Republic Insurance Co., 2009 CarswellOnt 4163, [2009] O.J. No. 3005, 179 A.C.W.S. (3d) 38, 76 C.C.L.I. (4th) 151, Wawanesa Mutual Insurance Co. and Continental Casualty Co., Re, 2107 CarswellOnt 7581, 67 C.C.L.I. (5th) 299 [^41]: Ontario (Minister of Finance) v. Lombard insurance Co. of Canada, 2010 ONSC 1770, 100 O.R. (3d) 51 (This case involved the Fund and considered whether it had provided notice to Lombard of a priority dispute within the 90 days provided by O. Reg. 283/95), Her Majesty the Queen in Right of Ontario as Represented by the Minister of Finance v. The Guarantee Company of North America (March 24, 2011) unreported Arbitrator Densem (This case involved the Fund. It notified Guarantee of a priority dispute. Guarantee accepted priority and agreed to assume adjusting of the file. Guarantee reimbursed the Fund in the amount of $26,933.30 but declined to pay a further $14,962.84 in adjusting expenses that had been paid by the Fund prior to Guarantee accepting priority. The issue of whether the Fund was entitled to reimbursement of these expenses was the subject of the arbitration. The arbitrator used the equitable remedy of unjust enrichment to allow for reimbursement beyond the statutory benefits that had been paid.) Aviva Insurance Company of Canada and Sovereign General Insurance Company (January 27, 2016), unreported Arbitrator Samis [^42]: Award of Arbitrator Scott W. Densem dated August 29, 2017 at p.64 of 81. [^43]: Ibid at pp. 66 and 67 of 81