Continental Casualty Company v. Chubb Insurance Company of Canada et al.

[Indexed as: Continental Casualty Co. v. Chubb Insurance Co. of Canada]

Ontario Reports Ontario Superior Court of Justice Stinson J. June 19, 2019 146 O.R. (3d) 338 | 2019 ONSC 3773

Case Summary

Insurance — Automobile insurance — Interpretation and construction — E being owner and CEO of forest products company which obtained automobile insurance policy for its vehicles — E not operating company vehicles at any time — Vehicles not being made available for E's regular use based on fact that it was theoretically open to him as owner of company to drive insured vehicle — Arbitrator erring in finding that E was deemed named insured under policy based upon "regular use" provisions in s. 3(7)(f) of Statutory Accident Benefits Schedule — Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10, s. 3(7) (f).

Insurance — Automobile insurance — Priorities — E being catastrophically injured when struck by motor vehicle while jogging — E being insured under automobile insurance policy issued by Chubb which provided him with coverage of up to $1 million for medical and rehabilitation expenses — CNA issuing automobile insurance policy to E's company which included optional coverage providing for additional $1 million for medical and rehabilitation expenses — CNA policy including OPCF-47 endorsement — Priority rules as between insurers not being altered as result of issuance of OPCF-47 — CNA being required to pay mandatory and optional SABS benefits to E but being entitled to reimbursement from Chubb for cost of mandatory benefits.

E was catastrophically injured when struck by a motor vehicle while jogging. He had a personal automobile insurance policy with Chubb which provided him with coverage for up to $1 million for medical and rehabilitation expenses. He was also the owner, president and CEO of a forest products company that had an automobile policy with CNA. The CNA policy included optional coverage that provided for up to an additional $1 million for medical and rehabilitation expenses. The CNA policy also included the OPCF-47 endorsement, and E was entitled to the benefit of that endorsement. Chubb started paying statutory accident benefits to E, but served a priority notice on CNA disputing its liability to pay those benefits. The arbitrator found that CNA was the priority insurer, and thus responsible for paying E's benefits. CNA appealed.

Held, the appeal should be allowed.

The arbitrator erred in finding that E was a "deemed named insured" under the CNA policy based on the "regular use" provisions of s. 3(7)(f) of the Statutory Accident Benefits Schedule -- Effective September 1, 2010, O. Reg. 34/10. E did not operate any of his company's vehicles at any time. The vehicles were not made available for his use based on the fact that it was theoretically open to him as the owner of the company to drive the insured vehicles.

The priorities rule as between insurers was not altered as a result of the issuance of the OPCF-47. CNA was required to pay both mandatory and optional SABS benefits to E, and was entitled to reimbursement from Chubb for the cost of all mandatory benefits paid by CNA to E and the expenses associated with administering the mandatory SABS benefits.

Cited Cases and Legislation

Cases Referred To:

• Echelon General Insurance Co. v. Cooperators General Insurance Co., 2015 CarswellOnt 20908, apld
• ACE INA Insurance v. Co-operators General Insurance Co., [2009] O.J. No. 1276, 79 M.V.R. (5th) 312, 71 C.C.L.I. (4th) 272, [2009] I.L.R. 1-4824, 2009 ONSC 13625 (S.C.J.)
• Dominion v. Federated, 2012 CarswellOnt 17947 (Arbitrator Densem)
• Dominion v. Lombard, 2013 CarswellOnt 19270 (Arbitrator Bialkowski)
• Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, 2008 SCC 9, 291 D.L.R. (4th) 577, 372 N.R. 1, J.E. 2008-547, 329 N.B.R. (2d) 1, 69 Admin. L.R. (4th) 1, 64 C.C.E.L. (3d) 1, [2008] CLLC Â220 -020, 69 Imm. L.R. (3d) 1, 164 A.C.W.S. (3d) 727, 95 L.C.R. 65, EYB 2008-130674, 2008 DFQ Â10,098, D.T.E. 2008T-223, 170 L.A.C. (4th) 1
• Intact Insurance Co. v. Allstate Insurance Co. of Canada (2016), 131 O.R. (3d) 625, [2016] O.J. No. 4113, 2016 ONCA 609, 403 D.L.R. (4th) 438, 351 O.A.C. 1, 60 C.C.L.I. (5th) 1, 268 A.C.W.S. (3d) 425, 2016 OABC ÂA-1226

Statutes Referred To:

• Arbitration Act, 1991, S.O. 1991, c. 17, s. 45(5)
• Insurance Act, R.S.O. 1990, c. I.8, s. 268 [as am.], (5) [as am.], (5.1) [as am.]

Rules and Regulations Referred To:

• Disputes Between Insurers, O. Reg. 283/95 [as am.]
• Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10 [as am.], s. 3(1) [as am.], (7) [as am.], (f)

APPEAL from the award of an arbitrator.

Counsel: Mark Donaldson and Dana R. Spadafina, for appellant. Jason R. Frost and Emma Duggan, for respondent on appeal Chubb Insurance Company of Canada. Nicholas Sampson, agent for Barbara A. MacFarlane, lawyers for the insured person/respondent on appeal.

[1] STINSON J.: — This case involves a dispute between two insurance companies over which of them has the responsibility to pay statutory accident benefits to Peter Ekstein. Mr. Ekstein was catastrophically injured when, as a pedestrian, he was struck by a motor vehicle on July 12, 2015.

[2] Mr. Ekstein's personal automobile insurance policy with Chubb Insurance Company of Canada, provided him with coverage for up to $1 million for medical and rehabilitation expenses. However, Mr. Ekstein was also the owner, President and CEO of a forest products company that had an automobile insurance policy with Continental Casualty Company ("CNA"). The CNA policy included optional coverage that provided up to an additional $1 million for medical and rehabilitation expenses, thus increasing the total available coverage to $2 million.

[3] While Mr. Ekstein was in intensive care at hospital, both Chubb and CNA were contacted regarding his catastrophic injuries and insurance coverage. In response, CNA erroneously advised that no optional coverage had been purchased under the CNA policy. CNA further advised that, based on CNA's investigation, Mr. Ekstein was not entitled to claim any benefits under the CNA policy, for several reasons: he did not operate a company vehicle or have access to a company vehicle; he was not in the course of his employment at the time of the accident; and he was not operating a vehicle insured by CNA at the time of the accident. Thereafter, Mr. Ekstein submitted an application for accident benefits to Chubb.

[4] Chubb processed Mr. Ekstein's application and began providing accident benefits. In addition, Chubb served a priority notice on CNA pursuant to O. Reg. 283/95, Disputes Between Insurers, disputing its liability to pay Mr. Ekstein's statutory accident benefits.

[5] In due course, the dispute between Chubb and CNA proceeded to arbitration. The parties to the arbitration as initially framed were Chubb and CNA. Mr. Ekstein applied for and was granted party status in view of the potential $1 million gap between the maximum available medical and rehabilitation coverage provided under the Chubb policy and that provided under the CNA policy.

[6] In a decision dated April 4, 2018, Arbitrator Kenneth Bialkowski concluded that CNA was the priority insurer, and thus responsible to pay Mr. Ekstein's benefits. CNA subsequently commenced this application by way of appeal from the decision of the arbitrator. It seeks an order overturning that decision and declaring that Chubb is the priority insurer.

Relevant Statutory and Regulatory Provisions

[7] Several statutory and regulatory provisions are relevant to the issues raised in this appeal. For ease of reference, these are reproduced as appendices to these reasons, as follows:

Appendix A -- Arbitration Act, 1991, S.O. 1991, c. 17, s. 45(5) Appendix B -- Insurance Act, R.S.O. 1990, c. I.8, s. 268 (extracts) Appendix C -- Statutory Accident Benefits Schedule -- Effective September 1, 2010, O. Reg. 34/10 ("SABS") (extracts) Appendix D -- OPCF 47 Endorsement

The Decision of the Arbitrator

[8] In relation to the underlying facts giving rise to the dispute, the Arbitrator noted that Mr. Ekstein was injured in a pedestrian-vehicle accident while jogging. He had a personal automobile policy with Chubb. The company of which he was the president and owner had an automobile policy (including optional enhanced benefits, unlike the Chubb policy) with CNA. Mr. Ekstein did not drive any of the company's vehicles, most of which were trucks used in its forest products business.

[9] The Arbitrator found that, although he did not ordinarily drive a company vehicle, Mr. Ekstein's name appeared on a "schedule of drivers" in relation to the CNA policy. This led the Arbitrator to conclude that, although not a "named insured", Mr. Ekstein was a person "specified in the policy" and therefore, an "insured" for purposes of the optional benefits. This led the Arbitrator to the further conclusion that Mr. Ekstein was an insured under the CNA policy by reason of being "a person specified as a driver" and the definition of "insured" as contained in s. 3(1) of the SABS, which includes "any person specified in the policy as a driver of the insured automobile". Before me, counsel for CNA confirmed that it took no issue with these conclusions of the Arbitrator.

[10] Having reached the foregoing conclusions, the Arbitrator went on to consider whether Mr. Ekstein was a "deemed named insured" under the CNA policy pursuant to s. 3(7) of the SABS. The reason for doing so was that if Mr. Ekstein was a named insured under only the Chubb policy, then pursuant to s. 268(5) of the Insurance Act, he would be obliged to claim statutory accident benefits as against Chubb. That provision states as follows:

285(5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy . . . the person shall claim statutory accident benefits against the insurer under that policy. (Emphasis added)

If, however, Mr. Ekstein was considered to be a named insured under the CNA policy as well, then pursuant to s. 268(5.1) of the Insurance Act, Mr. Ekstein in his own discretion could decide the insurer from which he would claim the benefits.

[11] Despite CNA's submissions, the Arbitrator concluded that Mr. Ekstein was a deemed named insured under the CNA policy, with the result that Mr. Ekstein had the discretion to decide from which insurer he would claim benefits. Since Mr. Ekstein would be entitled to an additional $1 million in medical and rehabilitation coverage from CNA, the Arbitrator reasoned that CNA was the insurer he would have selected. Applying equitable principles, the Arbitrator concluded that Mr. Ekstein was entitled to and had re-elected to pursue benefits from CNA.

[12] The Arbitrator's finding that Mr. Ekstein was a "deemed named insured" under the CNA policy was based upon his analysis of the "regular use" provisions of s. 3(7)(f) of the SABS. That provision states as follows:

3(7) For the purposes of this Regulation, (f) an individual who is living and ordinarily present in Ontario is deemed to be the named insured under the policy insuring an automobile at the time of an accident if, at the time of the accident, (i) the insured automobile is being made available for the individual's regular use by a corporation, unincorporated association, partnership, sole proprietorship or other entity, (Emphasis added)

[13] The Arbitrator considered two decisions involving the control that executives and owners had over the vehicles used in the ordinary course of their businesses, and the impact of that situation on a finding of "regular use". Those cases were Dominion v. Federated, 2012 CarswellOnt 17947 (Arbitrator Densem) and Dominion v. Lombard, 2013 CarswellOnt 19270 (Arbitrator Bialkowski).

[14] The Arbitrator found that, in each of those cases, the claimant had sufficient authority and control over the vehicles insured under the relevant policy to be found to be a deemed "named insured" by reason of s. 3(7)(f) of the SABS. The Arbitrator stated as follows (at para. 70 of his decision):

I make a similar finding in the case before me, in that Mr. Ekstein had sufficient control over the vehicles insured by CNA to be found a deemed "named insured" by reason of s. 3(7)(f) of the SABS. As president and CEO, he had control and access to them whenever he wanted, as he stated, "I call the shots".

[15] On the basis of foregoing analysis, the Arbitrator held that Mr. Ekstein was a deemed named insured under the CNA policy. In turn, as I have noted, he concluded that Mr. Ekstein would have claimed benefits from CNA as permitted by s. 268(5.1) of the Insurance Act. He therefore concluded that CNA was the priority insurer.

Procedural History

[16] This appeal first came before me for argument on January 30, 2019. The centre-piece of the CNA argument in chief was that the Arbitrator had erred and reached an unreasonable conclusion when he found that Mr. Ekstein was a "deemed named insured" under the CNA policy. As a result, the argument continued, since Mr. Ekstein was a "named insured" under the Chubb policy only, pursuant to s. 268(5) of the Insurance Act he was obliged to claim statutory accident benefits from Chubb.

[17] In response to the CNA submissions, both Chubb and Mr. Ekstein submitted that the Arbitrator had reached a correct and reasonable conclusion in relation to the deemed named insured issue. In addition, they pointed out that the CNA policy included the rights conferred under Endorsement OPCF-47 (reproduced in Appendix D), which effectively provided that CNA could not rely on the priority of payment rules in s. 268 of the Insurance Act. They therefore argued that, in any event, CNA was liable to pay statutory accident benefits as well as the increased optional benefits to Mr. Ekstein.

[18] In the course of his reply submissions, counsel for CNA conceded that the CNA policy included the OPCF-47 endorsement and that Mr. Ekstein was entitled to the benefit of OPCF-47. As such, Mr. Ekstein was entitled to look to CNA for payment of the enhanced $1 million of extra medical and rehabilitation costs purchased pursuant to the optional coverage. Counsel for CNA maintained, however, that, as between CNA and Chubb, responsibility for the basic statutory benefits was to be determined according to the priority rules set out in s. 268 of the Insurance Act, arguing that a contract between CNA and Mr. Ekstein could not serve to displace the statutory rights regarding insurers' liability for payment of statutory accident benefits as between themselves. To the extent that CNA paid basic statutory benefits to Mr. Ekstein, the argument continued, it had a right of indemnity from Chubb.

[19] CNA's position in relation to the survival of its right of indemnity from Chubb by reason of the priority rules as between insurers was not expressly raised in its notice of appeal or its factum. Nor was that topic addressed in CNA's argument in chief. As a result, counsel for Chubb objected to CNA being permitted to advance this line of argument. Rather than have counsel present arguments extemporaneously without deliberation or supporting authority, I directed that the argument of the application be adjourned so that all parties could consider and confirm their positions. Counsel for CNA subsequently confirmed in writing his client's concession on Mr. Ekstein's entitlement to the benefit of the optional coverage under the CNA policy. On this basis, Mr. Ekstein and his counsel withdrew from the proceedings.

[20] I subsequently conducted a case conference by telephone conference call with, and received further written submissions from, counsel for CNA and for Chubb. I have considered those further submissions in reaching the conclusions set out below.

Standard of Review

[21] All parties agree that the standard review in relation to the decision of an arbitrator in circumstances such as this is reasonableness: Intact Insurance Co. v. Allstate Insurance Co. of Canada (2016), 131 O.R. (3d) 625, 2016 ONCA 609; Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008 SCC 9.

Analysis

[22] CNA submits that the Arbitrator's conclusion that Mr. Ekstein was a deemed named insured under the CNA policy based on his finding of "regular use" was unreasonable. For the reasons that follow, I agree.

[23] In reaching his conclusion, the Arbitrator relied on two previous decisions. In the first case, Dominion v. Federated, the deemed named insured provision was applied where the policy sought to be invoked covered all automobiles on a used car lot. The father of the claimant was a 50 per cent owner of the business that operated the car lot. It was standard practice for the father/co-owner to drive one of the vehicles on the lot when he chose to do so. On the occasion in question, the father/co-owner allowed a third party to drive one of the vehicles from the lot to take the son of the father/co-owner to a certain location. This is when the accident occurred. The arbitrator in that case held that since the father/co-owner had regular use of the vehicles that were subject to the policy, he was a deemed named insured under the company policy. As a result, the insurer under the company policy was obliged to pay the statutory accident benefits.

[24] In the other case, Dominion v. Lombard, the insurance policy sought to be engaged was issued to the claimant's employer. During the course of her employment, the claimant was provided with regular use of a van owned by the employer and insured under the policy in question. Although the accident took place out of Ontario and did not involve the van -- indeed, the claimant was struck by a motor vehicle while riding a bicycle in Oregon -- the arbitrator concluded that the policy responded. The essence of the finding was based on the fact that during the course of her employment (from which she was on vacation at the time), an insured automobile (the van) was ordinarily made available for the claimant's regular use by her employer. This included the finding that the claimant continued to have control of the vehicle despite being on vacation, which the arbitrator described as "sufficient residual control to make her a deemed named insured".

[25] Thus, each of the two decisions relied upon by the Arbitrator involved situations in which the claiming party made actual use of the vehicle that was the subject of the policy. By contrast, in the present case, the evidence is uncontradicted that at no time did Mr. Ekstein make use of any of the company vehicles. Indeed, most of the vehicles insured by the CNA policy were tractor-trailers, although some were smaller trucks used in the business operations of the company. Although, because he was the president, CEO and owner of the company, it was theoretically open to Mr. Ekstein to have access to and choose to drive any of the insured vehicles, he never did so. The only vehicles that he actually drove were expressly insured under his personal Chubb policy.

[26] Thus, while there was an element of so-called "residual control" over the vehicles covered by the CNA policy, what is missing in this case is any evidence of those vehicles "being made available for [Mr. Ekstein's] regular use".

[27] In my view, it was unreasonable for the Arbitrator to impute regular usage to Mr. Ekstein when none existed. His decision contains no proper analysis of the evidence before him addressing the regular use provisions of s. 3(7)(f) in relation to the facts of this case. The Arbitrator failed to consider Mr. Ekstein's evidence that he never used a company vehicle prior to or at the time of the accident, or that a company vehicle was not being made available to him at the time of the accident. In so doing, the Arbitrator failed to follow the analytical approach set out in such cases as ACE INA Insurance v. Co-operators General Insurance Co., [2009] O.J. No. 1276, 2009 ONSC 13625 (S.C.J.).

[28] I conclude that the Arbitrator's decision is unreasonable because he failed to carry out the proper analysis, it is inconsistent with underlying legal principles, and the outcome ignores or cannot be supported by the evidence. To the contrary, the evidence supports the finding that no automobiles that were subject to the CNA policy were made available for Mr. Ekstein's regular use by the company. Since the outcome ignores that uncontroverted fact, I find it is unreasonable.

[29] In light of the foregoing conclusion, the Arbitrator's finding that CNA is the priority insurer by reason of the "deemed insured" provisions of s. 3(7)(f) of the SABS cannot stand, and must be set aside.

CNA's Obligations under OPCF-47 and its Right of Indemnity

[30] The foregoing determination does not, however, resolve all issues between the parties, due to the unchallenged finding by the Arbitrator that Mr. Ekstein was an "insured" under the CNA policy. In light of my conclusion that the Arbitrator's finding that Mr. Ekstein "deemed insured" provisions of s. 3(7)(f) of the SABS cannot stand, I am required to consider the significance of the OPCF-47 endorsement and its impact on the parties' rights under the applicable contractual and statutory regimes.

[31] This topic was not addressed by the Arbitrator. Pursuant to s. 45(5) of the Arbitration Act (reproduced in Appendix A) on an appeal such as is, the court "may confirm, vary or set aside" the arbitration award. The statute thus gives the court authority to address issues that could have been, but were not, addressed by the Arbitrator.

[32] The arbitration agreement empowers the Arbitrator to "determine all matters in dispute between the parties arising out of" their priority dispute over Mr. Ekstein's statutory accident benefits. In light of that broad mandate, I consider the topics addressed below to be within the jurisdiction of the Arbitrator, and hence open to the court to decide as part of its power to vary the arbitration award.

[33] The dichotomy here is between the rights of Mr. Ekstein to SABS coverage under the two insurance policies and the rights and obligations of the two insurers between themselves to pay (or seek reimbursement for payment of) his SABS benefits. The former are governed by the insurance policies, while the latter are governed by the statutory regime that resolves priority issues between insurers.

[34] As regards, Mr. Ekstein, the Arbitrator found that he was an "insured" under the CNA policy "by reason of being a 'person' specified as a driver" and the definition of "insured" as contained in s. 3(1) of the SABS. The latter provision includes "any person specified in the policy as a driver of the insured automobile". By reason of this finding, the Arbitrator concluded that Mr. Ekstein was entitled to the optional benefits provided by the CNA policy. Although he did not expressly say so, presumably the Arbitrator's analysis would mean that Mr. Ekstein was also entitled to look to CNA for basic SABS benefits, since he is an "insured" under the CNA policy. Moreover, the terms of the OPCF-47 mean that Mr. Ekstein was not, vis-à-vis CNA, bound to the priority scheme prescribed by s. 268 of the Insurance Act.

[35] Thus, the Arbitrator's finding that Mr. Ekstein was an "insured" for purposes of the CNA policy resolved his right to receive basic and optional SABS benefits from CNA. That right was underpinned by the terms of the OPCF-47. This finding did not, however, resolve the statutory priority issue as between the two insurers. To do so requires a determination whether s. 268(5) of the Insurance Act applied and thus a determination whether Mr. Ekstein was a "named insured" under the CNA policy.

[36] Assuming the correctness of the Arbitrator's finding that Mr. Ekstein was a "deemed named insured" under the CNA policy, there is no dissonance between Mr. Ekstein's right to claim SABS from CNA, and the statutory priority regime: s. 268(5) would apply to the CNA policy. If, however, (as I have found), the Arbitrator erred in finding Mr. Ekstein was a "deemed named insured", then s. 268(5) would not apply to the CNA policy. In turn, the statutory priority regime would dictate that the basic SABS benefits should be paid by Chubb, because Mr. Ekstein was clearly a "named insured" under the Chubb policy.

[37] The net result of my finding that Mr. Ekstein was not a "deemed named insured" under the CNA policy would mean that CNA's legal obligation (under the CNA policy) to pay Mr. Ekstein's SABS benefits would be at odds with Chubb's obligations to do so under s. 268(5). In light of his finding that Mr. Ekstein was a "deemed named insured", the Arbitrator did not address this conflict. Given the power conferred by s. 45(5) of the Arbitration Act and the broad jurisdiction provided by the parties' arbitration agreement, I propose to address this question now.

[38] Fortunately, this question has been considered by a highly respected and very experienced arbitrator who has particular expertise in Ontario's automobile insurance regime, Lee Samis. In an arbitration decision released January 20, 2015 (Echelon General Insurance Co. v. Cooperators General Insurance Co.), 2015 CarswellOnt 20908, Mr. Samis addressed the interaction between the priority rules as between insurance companies and the issuance of an OPCF-47. In that decision, he stated (at paras. 26 and 27):

[T]here is nothing in this endorsement or any of the other provisions to address the impact on priority disputes between insurers. . . . [T]here does not seem to be any provision which would preclude [the issuer of the OPCF-47] from seeking redress from any higher ranking insurer. Nor does the Regulation or the Act limit possible priority actions by an insurer, having processed a claim on a policy where OPCF-47 applies.

It seems to me that the insurer paying a claim in conjunction with an OPCF-47 endorsement would have the right to reimbursement from a higher ranking insurer, at least to the extent of the mandatory benefits . . . . Simply put, nothing whatsoever has been done to limit or restrict the optional benefit insurer from pursuing the reimbursement aspect under the priority rules as they exist.

[39] Arbitrator Samis went on to observe (at para. 28) that he

would not be inclined to conclude that the priority dispute mechanism could be utilized for offloading the continued handling of the claim. The higher priority insurer, having only a partial obligation to respond, would not necessarily be the appropriate insurer to continue the file handling, regardless of its obligation to reimburse the optional benefit insurer. In effect, then, the insurer that has received the additional premium for agreeing to pay an optional benefit also gets the burden of the administration of the claim. But the insurer would be entitled to reimbursement from the higher ranking insurers. This reimbursement mechanism reduces the cost of the optional benefit for that insurer, and therefore this translates into lower cost access to optional benefits for consumers. This scheme makes sense.

[40] Later in his award, Arbitrator Samis stated as follows (at paras. 43 and 45):

Most importantly, nothing in the Regulations, statutory provisions or in the approved form of undertaking suggests that the priority rules, as between insurance companies, are altered as a result of the issuance of an OPCF-47.

[T]he net result is that the obligation for the mandatory benefits ultimately rests with the insurer having the highest ranking under section 268 of the Insurance Act. This is entirely appropriate. It supports the legislative intention of making optional benefits available at reasonable cost. Any other interpretation would have the effect of unduly loading costs onto the optional benefit insurers and would discourage individuals from purchasing that coverage for their protection.

[41] I respectfully agree with and adopt the foregoing analysis and conclusions.

[42] I therefore hold that, in the first instance, CNA must pay both standard and optional SABS benefits to Mr. Ekstein. CNA is entitled, however, to reimbursement from Chubb for all payments and expenses associated with paying and administering the standard benefits paid to Mr. Ekstein. CNA is obliged to pay the cost of all optional benefits provided.

Conclusion and Disposition

[43] For the above reasons, I set aside and vary the award of the Arbitrator and declare as follows:

(1) CNA must pay both mandatory and optional SABS benefits to Mr. Ekstein; (2) CNA is responsible for the cost of all optional benefits provided; (3) CNA is entitled to reimbursement from Chubb for the cost of all mandatory benefits paid by CNA to Mr. Ekstein; (4) CNA is entitled to reimbursement from Chubb for all expenses associated with administering the mandatory SABS benefits.

[44] In relation to costs, in light of the conclusions I have reached I would make no change to the disposition as to costs made by the Arbitrator in relation to the proceedings before him. In relation to the costs of the appeal before me, I encourage the parties to reach agreement. Failing agreement, I direct as follows:

(a) Chubb shall serve its bill of costs on CNA, accompanied by written submissions, within ten days of the release of these reasons. (b) CNA shall serve its response on Chubb within ten days thereafter. I expressly invite CNA to submit the bill of costs it would have presented had it been successful before me. (c) Chubb may, but is not obliged to, serve a reply within ten days thereafter. (d) In all cases, the written submissions shall be limited to three double-spaced pages, plus bills of costs. (e) I direct counsel for Chubb to collect copies of all parties' submissions and arrange to have that package delivered to me in care of Judges' Administration, at Room 106, 361 University as soon as the final exchange of materials has been completed. To be clear, no costs submissions should be filed individually: rather, counsel for Chubb will assemble a single package for delivery as described above. (f) If no written submissions are received by me within 30 days from the date these reasons are released, the issue of costs shall be deemed to be resolved by agreement of the parties.

Appeal allowed.

APPENDICES

APPENDIX A

Arbitration Act, 1991, S.O. 1991, c. 17, s. 45(5)

45(5) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal with the court's opinion on the question of law, in the case of an appeal on a question of law, and give directions about the conduct of the arbitration.

APPENDIX B

Insurance Act, R.S.O. 1990, c. I.8, s. 268 (extracts)

268(3) An insurer against whom a person has recourse for the payment of statutory accident benefits is liable to pay the benefits.

(4) If, under subparagraph i or iii of paragraph 1 or subparagraph i or iii of paragraph 2 of subsection (2), a person has recourse against more than one insurer for the payment of statutory accident benefits, the person, in his or her absolute discretion, may decide the insurer from which he or she will claim the benefits.

(5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is the spouse or a dependant, as defined in the Statutory Accident Benefits Schedule, of a named insured, the person shall claim statutory accident benefits against the insurer under that policy.

(5.1) Subject to subsection (5.2), if there is more than one insurer against which a person may claim benefits under subsection (5), the person, in his or her discretion, may decide the insurer from which he or she will claim the benefits.

(5.2) If there is more than one insurer against which a person may claim benefits under subsection (5) and the person was, at the time of the incident, an occupant of an automobile in respect of which the person is the named insured or the spouse or a dependant of the named insured, the person shall claim statutory accident benefits against the insurer of the automobile in which the person was an occupant.

(6) The insurance mentioned in subsection (1) is excess insurance to any other insurance not being automobile insurance of the same type indemnifying the injured person or in respect of a deceased person for the expenses.

(7) The insurance mentioned in subsection (1) is excess insurance to any other insurance indemnifying the injured person or in respect of a deceased person for the expenses.

(8) Where the Statutory Accident Benefits Schedule provides that the insurer will pay a particular statutory accident benefit pending resolution of any dispute between the insurer and an insured, the insurer shall pay the benefit until the dispute is resolved.

APPENDIX C

Statutory Accident Benefits Schedule -- Effective September 1, 2010, O. Reg. 34/10 ("SABS") (extracts)

33(1) In this Regulation,

"insured person" means, in respect of a particular motor vehicle liability policy,

(a) the named insured, any person specified in the policy as a driver of the insured automobile and, if the named insured is an individual, the spouse of the named insured and a dependant of the named insured or of his or her spouse,

(i) if the named insured, specified driver, spouse or dependant is involved in an accident in or outside Ontario that involves the insured automobile or another automobile, or

(ii) if the named insured, specified driver, spouse or dependant is not involved in an accident but suffers psychological or mental injury as a result of an accident in or outside Ontario that results in a physical injury to his or her spouse, child, grandchild, parent, grandparent, brother, sister, dependant or spouse's dependant,

(b) a person who is involved in an accident involving the insured automobile, if the accident occurs in Ontario[.]

(7) For the purposes of this Regulation,

(f) an individual who is living and ordinarily present in Ontario is deemed to be the named insured under the policy insuring an automobile at the time of an accident if, at the time of the accident,

(i) the insured automobile is being made available for the individual's regular use by a corporation, unincorporated association, partnership, sole proprietorship or other entity,

APPENDIX D

OPCF 47 Endorsement

Agreement Not To Rely On SABS Priority Of Payment Rules

OPCF 47

1. Purpose of This Endorsement

This endorsement is part of your policy. It has been made because persons who are entitled to receive optional statutory accident benefits under this policy may, by the priority of payment rules in Section 268 of the Insurance Act, be required to claim under another policy that that does not provide them with the optional statutory accident benefits that have purchased under this policy. This endorsement allows these persons to claim Statutory Accident Benefits (SABS) under this policy, including the optional statutory accident benefits provided by this policy, provided they do not make a claim for SABS under another policy.

2. What We Agree To

If optional statutory accident benefits are purchased and are applicable to a person under this policy, and the person claims SABS under this policy as a result of an accident and agrees not to make a claim for SABS under another policy, we agree that we will not deny the claim, for both mandatory and optional statutory accident benefits coverage purchased, on the basis that the priority of payment rules in Section 268 of the Insurance Act may require that the person claim SABS under another insurance policy.

All other terms and conditions of the policy remain the same.

End of Document