Court File and Parties

Court File No.: CV-19-00612900-0000 Date: 2024-12-13 Superior Court of Justice - Ontario

Re: The Commonwell Mutual Insurance Group Appellant And: Aviva Insurance Group Respondent

Before: Justice Parghi

Counsel: A. Setrakian, for the Appellant H. Zadegan, for the Respondent

Heard: November 15, 2024

Endorsement

[1] The Commonwell Mutual Insurance Group (“Commonwell”) appeals from a June 15, 2022 decision (the “Decision”) of an arbitrator, Jarvis Scott (the “Arbitrator”), regarding a loss transfer dispute. The issues on appeal are whether the Arbitrator applied the incorrect Rule under the Fault Determination Rules (R.R.O. 1990, Reg. 668, under the Insurance Act, R.S.O. 1990, c. I.8) and whether he improperly considered the circumstances surrounding the accident, contrary to the requirements of the Fault Determination Rules. The claim at issue is worth $20,653.97 plus interest.

[2] For the reasons below, I dismiss the appeal.

The Motor Vehicle Accident

[3] The motor vehicle accident at issue occurred on May 20, 2017. It involved a pick-up truck insured by Commonwell and a motorcycle insured by the Respondent, Aviva Insurance Group (“Aviva”). The two vehicles were driving in the same direction in adjacent lanes. The pick-up truck moved from the centre lane into the curb lane as the motorcycle was approaching from behind, in the curb lane. The motorcycle was laid down. The Arbitrator found that the two vehicles made contact and that at some point the motorcyclist came off the bike and slid into the rear left wheel well of the pick-up truck.

The Decision

[4] In his Decision, the Arbitrator provided an initial overview of the incident in which he stated that “[a]t or near the time of the lane change,” the motorcycle was laid down. He then outlined the evidence of various witnesses. He observed that their evidence was “consistent on one key point”, namely that the pick-up truck changed lanes into the curb lane “immediately before the accident”. The motorcycle was “proceeding in the adjacent lane behind the” pick-up truck. “As a result of the lane change” the motorcyclist laid down the bike.

[5] The Arbitrator then stated:

I find that based on all of the evidence, the lane change of the [pick-up truck] into the curb lane occurred at a time when the [motorcycle] was gaining on the [pick-up truck] in the curb lane. The lane change was not made in safety. In response, [the motorcycle driver] laid down the bike. I find that the … motorcycle made contact with the [pick-up truck]. At some point, [the motorcycle driver] came off the bike and slid into the rear left wheel well.

This is not a case where the [pick-up truck] had completed a lane change, was established in the lane and then slowed or came to a stop ahead of the [motorcycle] such that it could be characterized as a rear end collision, and that [the motorcycle driver] failed to keep a proper lookout. Rule 6 is not applicable.

[6] The Arbitrator went on to find that the accident was governed by Rule 10(4) of the Fault Determination Rules. Rule 10 applies when automobile A “collides” with automobile B and both automobiles are travelling in the same direction and in adjacent lanes. Rule 10(4) provides, “If the incident occurs when automobile ‘B’ is changing lanes, the driver of automobile ‘A’ is not at fault and the driver of automobile ‘B’ is 100 per cent at fault for the incident.” The Arbitrator held: “I find that the applicable Fault Determination Rules [sic] in this matter is Rule 10 and in particular, Rule 10(4). The [pick-up truck] (automobile B under this Rule) was changing lanes and the … motorcycle (automobile A) is not at fault.”

[7] The Arbitrator also held that Rule 6 of the Fault Determination Rules did not apply. Rules 6(1) and (2) apply when automobile A is “struck from behind” by automobile B and both automobiles are travelling in the same direction and in the same lane. Rule 6(1) provides, “This section applies when automobile ‘A’ is struck from the rear by automobile ‘B’, and both automobiles are travelling in the same direction and in the same lane.” Rule 6(2) provides, “If automobile “A” is stopped or is in forward motion, the driver of automobile “A” is not at fault and the driver of automobile “B” is 100 per cent at fault for the incident.” As the passage cited above indicates, the Arbitrator was of the view that the pick-up truck had not completed its lane change, it was not established in the lane, the accident could not be considered a rear-end collision, and Rule 6 did not apply.

[8] Applying Rule 10(4), the Arbitrator determined that the driver of the pick-up truck was 100% at fault. Commonwell now appeals.

Issues on Appeal

[9] There are two issues on appeal: whether the arbitrator erred by applying Rule 10(4) of the Fault Determination Rules, instead of Rule 6, and whether he erred by considering the circumstances surrounding the accident, contrary to the requirements of Rule 3.

Standard of review

[10] This appeal arises under subsections 45(2) and 45(3) of the Arbitration Act, 1991, S.O. 1991, c. 17, which allow for appeals of arbitral decisions if the arbitration agreement between the parties so provides. The arbitration agreement here so provides; it states that an appeal may be brought before a judge of the Superior Court of Justice, without leave, on a point of fact, a point of law, or a point of mixed fact and law. Accordingly, this appeal is based on the statutory right of appeal, and the appellate standard of review applies.

[11] Aviva states that the right of appeal is established in the arbitration agreement rather than the Arbitration Act and that therefore the appellate standard of review does not apply. Respectfully, that view is mistaken. The arbitration agreement provides for the statutory right of appeal. It does not supplant it.

[12] The appellate standard of review is correctness on issues of law and palpable and overriding error for questions of fact. Matters of mixed fact and law lie along a spectrum (The Dominion of Canada General Insurance Company v. Trafalgar Insurance Company, 2022 ONSC 4270, 163 O.R. (3d) 301, at paras. 63-64).

Issue 1: Whether the Arbitrator erred in applying Rule 10(4)

[13] The first issue on appeal is whether the Arbitrator erred in law by applying Rule 10(4) instead of Rule 6.

[14] Commonwell states that the Arbitrator erred in doing so because by the time the collision occurred, the pick-up truck and motorcycle were in the same lane, not adjacent lanes. The motorcycle then hit the truck from behind. As such, Rule 6, which applies when “both automobiles are travelling in the same direction and in the same lane”, governs.

[15] Commonwell submits that the Arbitrator’s factual findings are consistent with this. It notes that the Arbitrator stated that the pick-up truck changed lanes “immediately before the accident” which implies that the lane change was completed by the time of the accident. Commonwell also points to the Arbitrator’s comment that the pick-up truck’s “lane change … into the curb lane occurred at a time when the [motorcycle] was gaining on the [pick-up truck] in the curb lane” – language that it says also indicates that the lane change had concluded at the time of the incident.

[16] I find that the Decision, read as a whole, does not support Commonwell’s interpretation. To the contrary, the Decision shows that the Arbitrator was of the view that the accident happened either during the lane change, or so close in time to the lane change that it nonetheless falls under Rule 10(4). This is made clear in the Arbitrator’s findings that the truck “was changing lanes” at the time of the accident and that the motorcycle was laid down “[a]t or near the time of the lane change”. It is also reflected in his observation that the motorcyclist laid down the bike “[a]s a result of the lane change” – a phrase that draws a clear causal link between the lane change and the accident and thus further supports the application of Rule 10(4). Indeed, the Arbitrator also held that this was “not a case” where the truck “had completed a lane change” or was “established in the lane” that the motorcycle was in – circumstances that would have called for the application of Rule 6. Indeed, it is clear from the Decision, read as a whole, that the fact of the lane change figured prominently into the Arbitrator’s reasons.

[17] Simply put, Rule 10(4) is concerned with accidents caused when a vehicle moves from one lane into another and hits a vehicle driving in the same direction in that second lane. It is clear from his reasons that the Arbitrator considered that to be what happened here. Rule 6(2), meanwhile, is concerned with accidents caused when one vehicle is hit by a car behind it that is driving in the same direction and the same lane. It is clear from his reasons that the Arbitrator did not consider that to be what happened here.

[18] Commonwell’s suggestion appears to be that after the lane change and before the accident, the two vehicles were in the same lane and travelling in the same direction, however fleetingly, and that therefore the Rule governing lane changes does not apply. Commonwell has not persuaded me that the Arbitrator found that to be the case. Even if he did, I am not persuaded that it renders incorrect his finding that Rule 10(4) applies. Respectfully, this strikes me as a somewhat artificial argument that relies on a second-by-second parsing of an accident that occurred quickly, and occurred either during or immediately on the heels of a lane change. This type of parsing exercise would undermine the policy purpose behind the loss transfer scheme, which is to establish “an expedient and summary method of spreading the cost of statutory accident benefits among insurers, in a gross and somewhat arbitrary fashion, favouring expediency and economy over finite exactitude” (State Farm Mutual Automobile Insurance Company v. Aviva Canada Inc., 2015 ONCA 920, 128 O.R. (3d) 321, at para. 56, citing Jevco Insurance Co. v. York Fire & Casualty Co. (1996), 27 O.R. (3d) 483 (C.A.), at paras. 8-9).

[19] I am therefore of the view that the Arbitrator did not err in law in finding that Rule 10(4) applies.

Issue 2: Whether the Arbitrator erred in considering the circumstances surrounding the accident

[20] The second issue on appeal is whether the Arbitrator erred in law, or made an error of mixed fact and law, by considering the circumstances in which the accident occurred.

[21] Commonwell states that the Arbitrator improperly considered the circumstances surrounding the accident, for instance by looking at whether the pick-up truck was established in the lane, whether it had slowed or come to a stop, and whether the motorcyclist failed to keep a proper lookout. The passage of the Decision with which Commonwell is concerned is the following, which is also quoted above:

This is not a case where the [pick-up truck] had completed a lane change, was established in the lane and then slowed or came to a stop ahead of the [motorcycle] such that it could be characterized as a rear end collision, and that [the motorcycle driver] failed to keep a proper lookout. Rule 6 is not applicable.

[22] Commonwell submits that the Arbitrator was prohibiting from considering the circumstances in which the incident occurred under Rule 3 of the Fault Determination Rules. Rule 3 is a general provision that informs all fault determinations made under the Fault Determination Rules. It provides:

The degree of fault of an insured is determined without reference to, (a) the circumstances in which the incident occurs, including weather conditions, road conditions, visibility or the actions of pedestrians; or (b) the location on the insured’s automobile of the point of contact with any other automobile involved in the incident.

[23] I am unable to accept Commonwell’s submission. Read in the context of the Decision as a whole, the passage about which Commonwell is concerned is actually an explanation of the Arbitrator’s finding that Rule 6 does not apply, and that Rule 10(4) does apply. In particular, he is explaining his interpretation of Rule 6, which Commonwell had argued before him ought to govern the accident. He is also explaining the specific facts of the accident that placed it out of reach of Rule 6 – namely, that the truck had not completed the lane change, was not established in the lane, had not slowed or come to a stop ahead of the motorcycle, and so on. These are not “external circumstances” that the Arbitrator was prohibited from considering by Rule 3. To the contrary, these were the circumstances of the accident before him, and he rightly considered them in the course of evaluating which Fault Determination Rule properly applied.

[24] I therefore do not give effect to this ground of appeal.

Costs

[25] In exercising my discretion to fix costs under section 131 of the Courts of Justice Act, R.S.O. 1990, c C.43, I may consider the factors enumerated in rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg 194. These include the result achieved, the amounts claimed and recovered, the complexity and importance of the issues in the proceeding, the principle of indemnity, the reasonable expectations of the unsuccessful party, and any other matter relevant to costs.

[26] In Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, the Ontario Court of Appeal restated the general principles to be applied when courts exercise their discretion to award costs. The Court held that, when assessing costs, a court is to undertake a critical examination of the relevant factors, as applied to the costs claimed, and then “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable”.

[27] Applying these principles here, I note that the Respondents were entirely successful in this application. Their time spent on the appeal, including the appeal materials, was reasonable. So too are their hourly rates and the degree to which they delegated work to junior team members where feasible. I therefore consider it fair and reasonable to grant them their partial indemnity costs, calculated as 60% of their full costs. This amount is $13,666.78, inclusive of HST. I order the Applicants to pay that amount to the Respondents within 30 days.

Parghi J. Date: December 13, 2024