SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE MATTER of the Insurance Act, R.S.O. 1990, c. 1.8, s. 268 (2) and Ontario Regulations 34/10 and 283/96 thereunder;
AND IN THE MATTER of the Arbitration Act, 1991, S.O. 1991, c.17;
AND IN THE MATTER of an Arbitration:
RE: COSECO INSURANCE COMPANY, Applicant/Respondent in the Appeal
AND:
LIBERTY MUTUAL GENERAL INSURANCE COMPANY and GMAC INSURANCE COMPANY, Respondents (Respondent in the Appeal/Appellant in the Appeal
BEFORE: Justice S. Nakatsuru
COUNSEL: Daniel Strigberger and Julianne Brimfield, for the Applicant/Respondent in the Appeal Barry G. Marta, for the Respondent/Appellant in the Appeal Catherine A. Korte and Michelle Legault, for the Respondent/Respondent in the Appeal, Liberty Mutual General Insurance Company
HEARD: August 21, 2019
ENDORSEMENT
1This is an appeal of an Arbitrator’s decision regarding a priority dispute between insurance companies. The essence of the appeal is whether the priority provisions found in s. 268 of the Ontario Insurance Act, R.S.O. 1990, c. I-8 (“Insurance Act”) applies to an out-of-province insurer for an accident that took place in Ontario.
A. OVERVIEW
2In this case, the claimant was a resident of the State of New York. GMAC Insurance Company (“GMAC”) issued him a New York motor vehicle insurance policy. GMAC is not licensed to sell insurance in Ontario. The claimant was involved in an accident in Toronto on July 4, 2015. The car in which he was a passenger was insured by Ontario insurer, Coseco Insurance Company (“Coseco”). Liberty Mutual Insurance Company (“Liberty”) insures the spouse of the claimant with a New York state automobile insurance policy.
3The claimant applied to Coseco for statutory accident benefits under the Statutory Accident Benefits Schedule, O. Reg. 34/10 (“SABS”). Coseco accepted his application and has paid statutory accident benefits.
4Coseco commenced an arbitration to determine the priority pursuant to s. 268 of the Insurance Act. According to the Arbitration Agreement, the issue for determination was:
Do the priority provisions in Section 268 of the Insurance Act apply to the circumstances of this case as noted above?
5In her decision of December 21, 2018, the Arbitrator decided it did.
6GMAC has appealed this decision. Both Coseco and Liberty take the position that the Arbitrator’s decision should be upheld.
A. STANDARD OF REVIEW IS REASONABLENESS
7I find that the applicable standard of review is reasonableness: Intact Insurance Co. v. Allstate Insurance Co. of Canada, 2016 ONCA 609, 131 O.R. (3d) 625, at para. 53.
8The arbitration involved a priority dispute. The presumption is that the standard of review on appeal is reasonableness. I find that there are no exceptional circumstances here that would invite a correctness standard.
9GMAC argued that the issue involved a constitutional question and a question of law that is of central importance to the legal system as a whole. I do not accept this argument. Firstly, there is no question of law of such importance. As I said, this is a priority dispute. It is meaningful to the parties, but the issues raised do not elevate the dispute to a correctness standard. Secondly, I find that it does not involve a constitutional question. It is true that the facts of the case involve more than one jurisdiction and GMAC submits that the Arbitrator’s decision results in the Ontario legislation having extra-jurisdictional effect. However, this does not make the issue a constitutional question. The Arbitrator was examining and interpreting provisions of the Insurance Act, considering the authorities on point, and resolving the dispute between these three insurance companies. This fell well within her field of expertise. The fact that during the course of deciding this issue, reference has to be made to such basic legal principles as provincial legislation should not be given extra-territorial effect, does not turn a priority issue into constitutional one.
10If I am wrong on the standard of review, I still find that on a correctness standard, the appeal should be dismissed.
B. ANALYSIS
11GMAC argues that the Arbitrator erred in finding that s. 268 of the Insurance Act applied to GMAC. It submits that the Ontario legislation does not apply in the circumstances of the case since it would not accord with the territorial limits on provincial jurisdiction. GMAC essentially relies upon the case of Unifund Assurance Co. of Canada v. Insurance Corp. of British Columbia, 2003 SCC 40.
12In my view, the Arbitrator’s decision was reasonable. Indeed, it was correct.
13Dispositive of this appeal is that this case is on all fours with the binding decision of Healy v. Interboro Mutual Indemnity Insurance Co. (1999), 1999 1485 (ON CA), 44 O.R. (3d) 404 (C.A.). The Arbitrator found this to be so. I find that she was right on this.
14Indeed, on this appeal, GMAC is unable to distinguish either factually or on legal principle the case of Healy. Rather GMAC argues that Healy is not binding as it did not deal with any constitutional issue and/or has been overtaken by Unifund.
15I do not find these arguments persuasive.
16Regarding GMAC’s first point, Healy cannot be distinguished this way. The alleged constitutional issue, the extra-jurisdictional application of the Insurance Act, simply did not arise on the facts in Healy. The facts involved the application of the Insurance Act and the Power of Attorney and Undertaking (“PAU”) to an accident in Ontario involving a participating American insurer. The same is the case here. Healy cannot be distinguished on the basis that an argument - the territorial limits of the Insurance Act - irrelevant to the resolution of the issues in that case, was not made.
17Regarding GMAC’s second point, Unifund did not overturn Healy. Indeed, Binnie J. in Unifund cited Healy with approval at para. 99.
18Like the Arbitrator, I find Unifund distinguishable on the facts raised in this particular arbitration. The key distinguishing factor is that unlike Unifund where the accident took place in British Columbia, the subject motor vehicle accident happened here in Ontario. It took place in the legislative jurisdiction of Ontario. Further, in Unifund, the PAU was not applicable to British Columbia. Here, GMAC has agreed to the terms of the PAU applying in Canada. As in Healy, this made the priority provisions in the Insurance Act applicable to it.
19In conclusion, the Arbitrator’s decision falls within the range of possible, acceptable outcomes that are defensible on the facts and law. If required, I would also have concluded that she was correct in her decision. I agree with the Arbitrator’s analysis where she states:
It is my view that the decision of the Court of Appeal in Healy directs me to conclude that where a motor vehicle accident occurs in Ontario, there is an out-of-province insurer whose policy covers the claimant, and that insurer has signed the PAU that the insurer is bound by section 268 of the Insurance Act in its entirety. I find that is the only logical conclusion. In other words to limit the out-of-province insurer to only being bound by section 268(1) of the Insurance Act would not make any legislative or practical sense. If the out-of-province insurer is bound to provide statutory accident benefits to an individual, then that same insurer is going to have any priority dispute determined under section 268(2) of the Insurance Act. It would make little sense that an insurer could be obliged to provide those statutory accident benefits and yet not be obliged to participate in the scheme to determine which of a variety of insurers is obliged to pay those benefits.
20The appeal is dismissed.
21I would encourage the issues of costs be resolved between the parties. If it cannot, I will entertain written submissions, each one limited to two pages excluding any attachments (any Bill of Costs, Costs Outline, and authorities). Coseco and Liberty shall file within ten days of the release of these reasons. GMAC shall file within seven days thereafter. There will be no reply submissions without leave of the court.
Justice S. Nakatsuru
Released: August 22, 2019