The Court of Appeal has allowed an insurer’s appeal asserting the one-year limitation period in an all-risk property policy. The decision highlights how important it is for insurance contracts – and especially limitation period provisions in them – to have clear language.
In Boyce v. The Co-operators General Insurance Company, the Boyces owned and operated a woman’s fashion boutique. Their business had been insured by Co-operators for a number of years. On October 30, 2010, Ms. Boyce arrived at the store to discover a foul odour emanating from the entrance area. The business had to be closed for a time, substantial clean-up costs were incurred, and a great deal of inventory could not be salvaged. The Boyces contacted Co-operators immediately. Co-operators took the position that the smell was caused by a skunk and that any damage was not covered by the policy. The Boyces claimed that the business had been vandalized, a peril covered by the policy.
The Boyces filed a proof of loss claim in December 2010 and commenced an action by Statement of Claim issued in February 2012, more than one year, but less than two years after the incident.
Co-operators moved for summary judgment, claiming that the action was time barred by a one-year limitation period. Co-operators first relied on the one-year statutory limitation period in s. 148 of the Insurance Act. For ease of reference, section 148 of the Insurance Act (Statutory Conditions for fire policies) contains 15 conditions that must form part of any fire policy. Condition 14 contains a one-year limitation period for bringing an action:
14. Every action or proceeding against the insurer for the recovery of a claim under or by virtue of this contract is absolutely barred unless commenced within one year next after the loss or damage occurs.
The motion judge held that Statutory Condition 14 didn’t apply because the Boyces’ multi-peril policy could not be classified as “fire insurance”. Co-operators did not appeal this finding.
At the motion Co-operators also relied upon the one-year limitation period contained in the actual policy, which stated:
However, the motion judge held that the provision in the policy limiting coverage to claims made within one year of the loss did not override the statutory two-year limitation period set out in s. 4 of the Limitations Act, 2002. In so holding, the motion judge held that the term in the policy lacked the specific language necessary to override the statutory limitation period and that in any event, the contract of insurance was not a “business agreement” as required under s. 22(5) of the Limitations Act, 2002 if a contract purports to override the two-year limitation period.
Co-operators appealed the decision on the motion judge’s holding that the contract of insurance did not contain an enforceable one-year limitation period. The Court of Appeal stated that the appeal raised three questions:
1) Is there a term in the contract of insurance that provides for a one-year limitation period?
2) If there is a term in the contract imposing a one-year time limit on claims, is that term capable of overriding the otherwise applicable two-year limitation period set out in the Limitations Act, 2002?
3) Is the contract of insurance a “business agreement” as defined in s. 22(6) of the Limitations Act, 2002?
On first question, the Court of Appeal found that the limitation provision in the contract could not have been any clearer. Accordingly, they agreed with the insurer that the contract did contain a one-year limitation period.
On the second question, the motion judge held that an agreement purporting to vary the statutory limitation period is enforceable under s. 22 of the Limitations Act, 2002 only if it contains specific (rigorous) requirements set out by the motion judge. The Court of Appeal disagreed, holding that nothing in the language of s. 22 offers any support for imposing these requirements. The only limitation in s. 22(5) is found in the definition of “business agreement”. No other limitation appears, expressly or by implication, and certainly no content related requirements appear in s. 22(5).
Importantly, the Court of Appeal provided the following guidance:
A court faced with a contractual term that purports to shorten a statutory limitation period must consider whether that provision in “clear language” describes a limitation period, identifies the scope of the application of that limitation period, and excludes the operation of other limitation periods. A term in a contract which meets those requirements will be sufficient for s. 22 purposes, assuming, of course, it meets any of the other requirements specifically identified in s. 22.
Finally, on the third question the Court of Appeal noted that “business agreement” is defined in s. 22(6) of the Limitations Act, 2002 as an agreement made by parties, none of whom is a consumer as defined in the Consumer Protection Act, 2002. That Act defines “consumer” as:
“Consumer” means an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.
The motion judge concluded that the insurance contract was not a “business agreement” under s. 22(5) for two reasons: First, he described the contract as a “peace of mind” contract. The Court of Appeal rejected that basis, holding that although its characterization as a “peace of mind” contract was appropriate, it did not have any effect on whether the insurance contract falls within the meaning of “business agreement” for the purposes of s. 22(5) of the Limitations Act, 2002. That determination is made solely by reference to the definition of “consumer” in the Consumer Protection Act, 2002.
Second, the motion judge concluded that because insurance contracts were not covered by the Consumer Protection Act, 2002, they could not be business agreements under s. 22(5). The Court of Appeal disagreed and held that the scope of the Consumer Protection Act, 2002 was irrelevant. The only relevance of the Consumer Protection Act, 2002 flows from the incorporation of the definition of “consumer” from that Act into s. 22(5) of the Limitations Act, 2002.
Accordingly, the Court of Appeal allowed the insurer’s appeal and held that the plaintiffs’ claims for this loss was barred, as they had commenced the action after the one-year limitation period prescribed in the policy.
It is apparent that what saved the insurer in this case was the clear language used to describe the one-year limitation period provision in the contract. This may be a good time for insurers to review their policies to ensure they also describe terms and conditions using clear language.
Finally, this decision leaves open a possible finding that a limitation period in a home policy (for example), which purports to override the statutory two-year limitation period, might be invalid, since a home policy would likely fail to meet the definition of a “business agreement” under the Limitations Act, 2002.
See Boyce v. The Co-Operators General Insurance Company, 2013 ONCA 298
Spring has sprung in Ontario and with it yesterday we received the first budget of our new Premier Kathleen Wynne. As the leader of a minority government, Premier Wynne faced pressures from the NDP to include certain things in the budget or face another provincial election. One of the NDP demands was a decrease in auto insurance premiums by 15% annually. Premium Wynne rose to the challenge and included the decrease in premiums in the budget, but the interesting part is how the government plans on making those decreased premiums a reality.
To clarify, the 15% decrease in premiums will occur within a period of time “to be prescribed by regulation.” Since the regulation prescribing the period of time has not been written yet, it is not clear when we see the decrease in premiums. The timelines for the reduction are still a hot button issue between the Liberals and NDP, and can be expected to be debated heavily before the budget is passed by the legislature.
Additionally, the decrease in premiums will be an average decrease. What does that mean? In areas where fraud is still an issue, and the rate and cost of handling insurance claims is still exponentially higher than other areas of the province (GTA we are looking at you), there may be little to no decrease, while other areas of the province will see decreases greater than 15%. Part of the larger decrease will also be given to safe drivers. Insurance companies will have to offer lower rates to people with clean driving records, but still keeping in mind where the driver lives. Along with tight timelines, the NDP are demanding hard caps on reductions. This means they are pushing for 15% reductions across the board for every driver, regardless of where they live or their driving record. The average premium reduction versus hard cap reductions will also be heavily debated during the budget consultation process.
The 15% reduction will also be attained through changes to the way insurance fraud is being addressed in this province. Everyone in the industry knows that fraud in the current Ontario automobile insurance system is affecting our premiums. In January 2013, the government introduced reforms to the Accident Benefits system that were a result of the final report from the Auto Insurance Anti-Fraud Task Force. The reforms will come into effect on June 1, 2013. The new reforms will require insurers to provide claimants with all reasons for denying a claim, give claimants the right to request bi-monthly detailed statements of benefits paid out (including amounts paid to specific clinics), require claimants to confirm their attendance at a clinic, make providers subject to sanctions if they overcharge the insurers, and ban providers from requesting claimants sign blank forms.
To take these reforms a further step forward towards eliminating the systemic fraud we deal with on a daily basis, the budget has proposed that FSCO be given the authority to license and oversee business practices of health clinics and practitioners who invoice auto insurers. If a provider does not want to be overseen by FSCO, then they would not be able to claim Accident Benefits from an insurer. The extent of the authority FSCO will have while overseeing the providers is not known since the details of this proposal will still need to be worked out in consultations; however, there is a suggestion in the budget that the extent of the authority will be significant. The budget also indicates that the Superintendent of FSCO will have expanded and modernized investigation and enforcement authority, particularly in the area of fraud prevention.
Another way the government has tried to combat fraud and lower premiums was the introduction of the Minor Injury Guideline $3,500.00 cap for treatments/assessments in the September 1, 2010 SABS. On March 26, 2013, Arbitrator Wilson released the first decision since the September 1, 2010 Accident Benefits reforms that examined the validity of the Minor Injury Guideline. In his decision, Arbitrator Wilson found that the MIG, as a Guideline and not a part of the SABS, is informational and non-binding. He further held that the advisory nature of the Guideline was not altered by its incorporation in the SABS.
Perhaps in a direct response to Arbitrator Wilson’s interpretation of the nature of Superintendent Guidelines, the budget proposes to change the definition and binding nature of Guidelines. Currently, s. 268.3(2) of the Insurance Act, R.S.O. 1990, c.I. 8, states that a Guideline shall be considered in any determination involving the interpretation of the SABS. The budget has proposed to amend the Act to make Guidelines incorporated by reference into the SABS binding. As a result, if the budget passes and the amendments to the Act are made, the MIG will be binding and Arbitrator Wilson’s decision is unlikely to be applicable to any other MIG challenge.
The topic of arbitration decisions brings up another issue addressed in the budget, the current dispute resolution system at FSCO for Accident Benefits disputes. Recent year end (March 31, 2013) statistics from FSCO show that while pending mediations at FSCO decreased from 36,425 in 2011/2012 to 23,305 in 2012/13, pending arbitrations at FSCO increased from 5,178 in 2011/2012 to 10,719 in 2012/2013. Although FSCO has made a concerted effort to clear the mediation backlog, it appears to be shifted to the next stage of the dispute resolution process, and is quickly becoming an arbitration backlog. The budget calls for an expert to examine the current dispute resolution system and make recommendations for legislation amendments by the Fall of this year.
In order to monitor premiums and ensure that the promised 15% reduction is attained, the budget also calls for a consolidation of statutory insurance reviews. The Superintendent will also be given the authority to require insurers to file for rates. As for reporting, an independent annual report by outside experts on the impact of all of the reforms made to date will examine the impact of the reforms on the cost of claims and premium rates. The experts will also make recommendations for further actions that may be necessary to meet the rate reduction targets.
The government has also agreed to investigate additional measures to award safe driving and reduce costs and premiums, examine the progress of the Minor Injury Treatment Protocol, investigate the possibility of overseeing towing in the province, and amend the definition of catastrophic impairment in the SABS. Finally, the government has indicated that in the Fall of this year, it intends to amend the Act to require all insurance companies (except members of the Fire Mutuals Guarantee Fund) to be incorporated in jurisdictions where solvency is regulated in accordance with international standards.
Obviously there may be a lot of changes coming to the auto insurance industry in Ontario, and especially Accident Benefits, over the next few months, but first the budget needs to go through consultations, it needs to be debated, and it needs to be passed by the legislature. Then the necessary laws need to be amended and regulations need to be written setting out timelines and granting additional powers to FSCO. If the changes are approved, all levels of the auto insurance industry will be affected, from incorporation of insurance companies, underwriting policies, regulation of treatment providers and the dispute resolution process. It looks like a simple reduction of auto insurance premiums has the potential to turn into an industry game changer.
For a link to the proposed amendments; see Bill 65, Prosperous and Fair Ontario Act (Budget Measures), 2013
The Superior Court has released a decision dealing with the priority pecking order under section 277 of the Insurance Act. That section determines the order in which third party liability insurers have to respond to tort claims arising from a motor vehicle accident. Unlike other cases, this one turned on deciding who the lessee of the vehicle was: The employee who leased it for a business trip or his employer who would reimburse him for the rental.
Before we get into this new decision, it is important to understand how section 277 applies when the target defendant's vehicle is leased. Section 277 (1.1) provides:
277. (1.1) Despite subsection (1), if an automobile is leased, the following rules apply to determine the order in which the third party liability provisions of any available motor vehicle liability policies shall respond in respect of liability arising from or occurring in connection with the ownership or, directly or indirectly, with the use or operation of the automobile on or after the day this subsection comes into force:
1. Firstly, insurance available under a contract evidenced by a motor vehicle liability policy under which the lessee of the automobile is entitled to indemnity as an insured named in the contract.
2. Secondly, insurance available under a contract evidenced by a motor vehicle liability policy under which the driver of the automobile is entitled to indemnity, either as an insured named in the contract, as the spouse of an insured named in the contract who resides with that insured or as a driver named in the contract, is excess to the insurance referred to in paragraph 1.
3. Thirdly, insurance available under a contract evidenced by a motor vehicle liability policy under which the owner of the automobile is entitled to indemnity as an insured named in the contract is excess to the insurance referred to in paragraphs 1 and 2.
(4) In this section,
"lessee" means, in respect of an automobile, a person who is leasing or renting the automobile for any period of time, and "leased" has a corresponding meaning.
To summarize, the priority pecking order for leased vehicles works like this:
- The lessee's insurer is first
- The driver's insurer is second
- The owner's insurer is third
Now let's get to this new case.
In Intact v. American Home, a man named Mr. Ashrafi worked for a company named Colt Engineering. As part of his job, he rented a vehicle from Budget Car Rental. He drove the rented vehicle on February 4, 2008, and it collided with another vehicle injuring the passenger in that vehicle, who sued Mr. Ashrafi.
At the time of the accident, Intact insured Ashrafi for his personal vehicles. American Home insured Colt Engineering under a CGL policy that provided automobile accident coverage if an employee is involved in motor vehicle accident in the course of his or her employment.
The narrow issue in this Application was to decide who the lessee of the rented vehicle was: Ashrafi or Colt. As noted above, if Ashrafi was the lessee his policy would be the first to respond (also the second because he was the driver). If Colt was the lessee, its policy with American Home would respond first up to its limits. Ashrafi's policy with Intact (insurer of the driver) would then follow.
Intact submitted that Ashrafi was not the "lessee" because the genuine lessee was Colt Engineering on whose behalf Ashrafi was engaged on business when he signed the contract with Budget Car Rental and from which he would be and from which he was in fact reimbursed for the expense of renting the car.
It was common ground that Ashrafi was working when his rented vehicle was involved in an accident with another vehicle. The facts were that Ashrafi came to Toronto for business purposes. He rented a 2008 Jeep from Budget Car Rental using a personal credit card provided to him by Colt Engineering for which he was reimbursed for the rental expense. The car rental agreement with Budget Car Rental was signed by Ashrafi. He used a personal American Express Credit that had been purchased for him by Colt Engineering. Ashrafi was entitled to use the credit card for business and personal expenses. Under Colt Engineering's corporate policy Ashrafi was responsible for his credit card charges, but he was entitled to be reimbursed for his business expenses.
Essentially, Intact argued that Colt was the de facto lessee of the renatl vehicle.
Justice Perell dismissed Intact's argument and found that at the time of the accident, Ashrafi was the lessee. He stated:
As a matter of first impression, I agree with American Home's argument. I see no unfairness in a straightforward interpretation of the section, and I see no reason to give s. 277 a reading that would introduce the concept of "de facto lessee" and encourage factual and legal disputes between insurers about how employment law, agency law, corporate law, partnership law, and the law of contract might apply to cast doubt on who is a lessee under s. 277 of the Insurance Act.
Who is the lessee can be tested and determined by asking the following question: Who can the lessor (Budget Car Rental) sue to enforce the car rental contract? In the case at bar, the answer to this question is Mr. Ashrafi. In the case at bar, the privity of contract was between Budget Car Rental and Mr. Ashrafi. This is not a case where Colt Engineering signed a car rental contract; this is a case where Mr. Ashrafi signed a car rental contact. As it happens, Mr. Ashrafi is entitled to be reimbursed for the rental expense by Colt Engineering but that is a matter between him and Colt Engineering. There is no privity of contract between Budget Car Rental and Colt Engineering.
As far as we know this is the first decision under section 277 of the Insurance Act that deals with the definition of "lessee" under that section.
See Intact Insurance Company of Canada v. American Home Assurance Company of Canada, 2013 ONSC 2372 (CanLII)
There is a new Superior Court decision answering the question of whether a particular uninsured all-terrain vehicle was required to be insured at the time of a motor vehicle accident. Although much of the decision is based on the facts of this case, the analysis could have an impact on other cases where insurers try to deny coverage to occupants of uninsured vehicles.
In Matheson v. Lewis, the plaintiff farmer used his Honda ATV on October 11, 2008 to travel from one part of his farm to another. The evidence was that he intended to travel for approximately thirty seconds, or less, on a public road in the course of his farming operation, in order to check on his flock of sheep, who are pastured on his property.
While he was on the public road, the defendant Lewis rear-ended Matheson’s ATV with a truck. As a result of the accident, Matheson suffered catastrophic injuries. He sued Lewis et al. in tort. He also sued his insurer, Lanark Mutual, for accident benefits.
The defendants brought a Rule 21 motion for the determination of a question of law raised by a pleading in an action. All the defendants took the position that the plaintiff was driving an uninsured automobile on a public road at the time of the accident. Accordingly, the tort defendants argued that his claim was barred pursuant to section 267.6(1) of the Insurance Act (in a nutshell, that section says that you cannot sue for damages arising from a motor vehicle accident if you were driving an uninsured vehicle at the time of the accident). Meanwhile, the accident benefits carrier Lanark argued that the claimant was not entitled to various specified accident benefits because he was driving an uninsured vehicle at the time of the accident, contrary to section 30 of the Statutory Accident Benefits Schedule (accidents before September 1, 2010).
The judge framed the issue as a question of mixed fact and law: Whether Arthur Matheson’s ATV on October 18th, 2008, was a “self-propelled implement of husbandry”. If so, it would be specifically excluded from Ontario’s compulsory insurance regime. If not, he would be in breach of such regime.
The judge set out the analysis well:
The Compulsory Automobile Insurance Act provides in section 2(1) that no owner or lessee of a motor vehicle shall operate the motor vehicle on a highway unless the motor vehicle is insured under a contract of automobile insurance. That Act gives motor vehicles the same meaning as under the Highway Traffic Act of Ontario.
The Highway Traffic Act, R.S.O., 1990, c.H.8, s.1, defines “motor vehicles” to include an automobile, a motorcycle, a motor-assisted bicycle unless otherwise indicated in this Act, and any other vehicle propelled or driven otherwise than by muscular power, but does not include a street car or other motor vehicle running only upon rails, a power-assisted bicycle, a motorized snow vehicle, a traction engine, a farm tractor, a self-propelled implement of husbandry or a road-building machine. [emphasis added]
A “self-propelled implement of husbandry” is defined in subsection 1 of the Highway Traffic Act as “a self-propelled vehicle manufactured, designed, redesigned, converted or reconstructed for a specific use in farming”.
In short, if the ATV in question was a “self-propelled implement of husbandry”, it would not have been a “motor vehicle” for the purpose of section 2 of the CAIA and, accordingly, would not have required to be insured under a motor vehicle liability policy.
The plaintiffs filed a wealth of evidence to support their position that the ATV was a “self-propelled implement of husbandry”: Several farmers including the plaintiff prepared affidavits attesting to how this type of ATV was used in farming. There was information from Honda Canada’s Web site describing the history of their ATV and how it had become “an essential part of the great American toolbox”.
The judge concluded at paragraph 51 that the ATV was a “self-propelled implement of husbandry”:
I find that any reasonably informed person about farming in Ontario, particularly beef and sheep husbandry, would readily discern the character and function of the vehicle driven by the Plaintiff, Arthur Matheson, on October 11, 2008, as being an implement manufactured and designed for a specific use in farming and animal husbandry. This is not a question of a specific use intended by this Plaintiff only. Based on the evidence provided in support of the Plaintiff, as referred to above, these machines are marketed and sold widely to farmers, as confirmed by the affidavits of people in the business of actually selling these machines, along with other farm implements.
I agree with the judge’s conclusions that the ATV in question in that case was a “self-propelled implement of husbandry”, which would not have been required to be insured under an automobile policy. It was a “self-propelled implement of husbandry” because it fit the definition.
However, the judge went on to comment on the remedial purpose of the CAIA, noting that if the defendants were successful the innocent claimant would be left without damages or various accident benefits:
The object of the Compulsory Automobile Insurance Act, according to its true intent, meaning and spirit is to protect the public, and specifically innocent people who are injured in motor vehicle accidents. The means implemented to attempt to achieve that end include this extremely harsh civil sanction. It is, of course, essential to have people on a broad base paying premiums into a fund that can be used towards that same purpose. In this particular case, if the Defendants succeed in their position, the injured party who was not at fault in the accident would be denied significant benefits including the right to claim any damages from the negligent party. The Plaintiff, Arthur Matheson, made a calculated decision not to pay what would have been modest insurance premiums on this particular piece of machinery, in view of its character and use. The primary purpose of insuring that vehicle would be to protect himself from liability if he were negligent and protect the innocent victim of his negligence. The secondary purpose would be for him to make a modest contribution towards the funds available in support of the entire insurance scheme. [emphasis added]
This is exactly the point of the “extremely harsh sanction” the statutory scheme: To punish those people who drive without insurance. The sanction in section 2 of the CAIA and section 267.7 is absolute: There is no need to establish that the person knew or ought to have known that they were driving an uninsured vehicle. If the motor vehicle was uninsured when it was supposed to be insured, the sanction applies. Whether Mr. Matheson made a calculated decision not to insure the vehicle has nothing to do with whether the ATV must be insured under a motor vehicle liability policy.
In short, in this case the judge was obviously faced with difficult facts: A sympathetic farmer who used an ATV on a public road for less than 30 seconds was catastrophically injured as a result of a negligent driver who was charged with careless driving, breach of probation, and obstruction of justice. That said, the analysis could have ended with the finding that the ATV was a “self-propelled implement of husbandry” and not whether the CAIA should be interpreted as being remedial to find for the plaintiff.
To borrow from the Divisional Court in Aviva v. Pastore:
“Remedial” means intended as a remedy. In this situation, the problem being remedied is not just to provide benefits, but to do so in a manner that accounts for the impact the provision of those benefits will have on the cost of insurance to the general public. This is not the interpretation of an insurance contract where ambiguity is resolved in favour of the insured (contra proferentem). It is identification of the purpose of the legislation and the interpretation of the legislation in a manner that bears that purpose in mind.
In Matheson, the problem being remedied is not just to allow the plaintiff to pursue a tort action and claim all accident benefits, but to do so in a manner that preserves the object of the CAIA, namely, to ensure people drive only motor vehicles that are insured. There was no need to interpret the CAIA liberally or as remedial to find for the plaintiff, having already found that he was driving a vehicle that did not need to be inusured.
I guess as an insurance lawyer, I get nervous whenever I read a decision where the tribunal interprets a statutory provision as being remedial.
See Matheson, et al, v. Lanark Mutual Insurance Company, et al, 2013 ONSC 2441 (CanLII).
The first Minor Injury Guideline (Guideline) decision has arrived. Pull out your French-English dictionary, as Arbitrator Wilson applies the language of love to determining Scarlett v. Belair, FSCO A12-00107, dated March 26, 2013.
In this case, the Applicant was injured in an accident on September 18, 2010. The Applicant took the position that he while he did suffer sprains and strains, he also suffered from pre-existing conditions and subsequent psychological disabilities that took him out of the Guideline. After the accident, the Applicant was diagnosed with TMJ syndrome, a Pain Disorder, severe depression, and chronic symptoms of PTSD, among other things.
Arbitrator Wilson found that the Guideline is informational and non-binding. He further held that the advisory nature of the Guideline was not altered by its incorporation in the Schedule.
That said, the Arbitrator quoted liberally from the Minor Injury Guideline-Superintendent Guideline No. 02/11. He noted that the Guideline appeared to create an exception to the obligation of an insurer to make payments of certain benefits to an insured person who would otherwise be entitled. Generally, the insurer would bear the burden to show than an insured falls under an exception to coverage. But, Arbitrator Wilson noted that the Guideline appeared to shift the burden of proving the exception onto the insured.
The Guideline, like the Schedule, notes that the $3,500 limit on benefits does not apply to an insured person if his or her health practitioner determines and provides compelling evidence that the insured person has a pre-existing medical condition that will prevent the insured person from achieving maximal recovery from the minor injury if the insured person is subject to the $3,500 limit or is limited to the goods and services authorized under the Minor Injury Guideline.
Arbitrator Wilson then turned his attention to the meaning of "compelling evidence" in the context of the Guideline, to understand the extent of the evidentiary burden imposed by the Guideline. In so doing, Arbitrator Wilson referenced the French version of the Guideline, as support for the argument that the Guideline did not create an extra evidentiary burden for an insured.
The Meanings of “Convincing”, “Compelling” and “Credible”
Arbitrator Wilson noted that the French version of the Guideline uses the phrase "la preuve convaincante" to qualify the information required to support an exception from the MIG. The word "convaincante" literally translates to "convincing". Arbitrator Wilson noted that any proof that is accepted by an adjudicator can always be called convincing since it persuades the adjudicator to make a certain decision. He noted that the word "convaincant" lacks the potential force of the word "compelling". This, he suggests, means that the authors of the Guideline intended that only "credible" evidence need be submitted to take an insured out of the Guideline.
And so Arbitrator Wilson slid from "compelling" to "convincing" to "credible". Perhaps a glass of red wine or cognac and flowers might be in order, as this interpretation is not convincing (or compelling), notwithstanding the romance of the French language.
Firstly, the French version of the Schedule does not use the word “convaincante” in respect of the evidence required to exempt an insured from the Guideline (indeed, the word “convaicant” or “convaincante” does not appear in the Schedule anywhere). Rather, the Schedule uses the word “probante”.
Specifically, the French version of section 18(2) of the Schedule states:
Malgré le paragraphe (1), le plafond de 3 500 $ qui y est prévu ne s’applique pas à la personne assurée si son praticien de la santé détermine, en fournissant des preuves probantes de ce fait…
Further, section 38(3)(c)(i)(B) of the French version of the Schedule states :
soit que la déficience de la personne assurée est principalement une blessure légère mais que, selon les preuves probantes fournies par le praticien de la santé….
“Probante” translates literally to probative but also can be held to mean “convincing”. To this end, it is not clear what Arbitrator Wilson would make of the word “probante” and whether its interpretation would change his conclusions in any way.
Conjugation Made Easy: the Meaning of “Devrait”
Again with respect to the interpretation of the phrase “la preuve convaincante devrait être fournie”, Arbitrator Wilson further held that the use of the conditional tense of the verb “devrait” (rather than, presumably, the “indicatif présent” conjugation “doit”) meant that the French version of the Guideline merely encouraged the provision of compelling evidence, rather than mandating it.
A close reading however suggests that the phrase "la preuve convaincante devrait être fournie" in the French version of the Guideline is in relation to the form in which the proof must be submitted. The phrase reads "la preuve convaincante devrait être fournie au moyen du formulaire FDIO-18, Plan de traitement et d'évaluation, auquel seront joints les documents médicaux préparés le cas échéant par un practicien de la santé".
The equivalent paragraph in the English version of the Minor Injury Guideline-Superintendent’s Guideline No. 02/10 states: “Compelling evidence should be provided using the Treatment and Assessment Plan (OCF-18) with attached medical documentation, if any, prepared by a health practitioner.”Therefore, this phrase means that the proof or evidence to exempt a claimant from the Guideline should be provided on an OCF-18, not that the evidence itself is not mandatory.
Arbitrator Wilson found that the only way he could reconcile the English and French versions of the Guideline would be to interpret both provisions as merely an “exhortation” to medical practitioners and other stakeholders to provide credible or convincing evidence if they wish to ensure that an insured is to be treated as being outside of the Guideline.
Arbitrator Wilson distilled the critical elements of the Guideline as follows:
1. Persons who suffer minor injuries should be treated appropriately, with early, quick and limited intervention to assist in recovery.
2. the decision or not to treat an insured either within the MIG or not should be made on the basis of credible medical evidence and not on speculation.
3. Even those persons who otherwise might be within the MIG can be treated outside of the Guideline if there is credible medical evidence that a pre-existing condition will prevent the insured person from achieving maximal recovery from the minor injury.
Arbitrator Wilson then examined the evidence and found the Applicant’s injuries “distinct” from soft tissue injuries, and that the existence of those injuries was supported by “credible” evidence. Therefore, Arbitrator Wilson found that the insurer had failed in its burden to prove that the Applicant fell within the Guideline.
Given Arbitrator Wilson’s conclusions, drawn from rather troubling interpretations of the French version of the Guideline, there is still a viable argument that some enhanced burden of proof rests with the insured, to provide “compelling” evidence of pre-existing issues. Arbitrator Wilson’s interpretation of the Guideline as an “exception” to the requirement that an insurer pay certain benefits may be over reaching. Interpreting the Guideline as an “exception” shifts the burden onto the insurer, to prove that the insured falls within the exception. The Guideline could simply be interpreted as a monetary cap to benefits, based the nature of the impairment sustained, and that, contrary to Arbitrator Wilson’s comments, standard benefits should not be considered an automatic “policy default”.
Many further implications and issues arise from Arbitrator Wilson’s decision, and these will be discussed in the days and weeks ahead. But, it suffices to say that, for insurers, the romance with the MIG is rocky. It might be a good time for Insurers to change that Facebook relationship status to “it’s complicated”.
A Superior Court judge has ruled that marijuana plants are, indeed, plants.
In Stewart v. TD Insurance, the plaintiffs insured the contents of their residence under a policy with the defendant insurer. Stewart was licensed to possess and cultivate marijuana for medicinal purposes. The decision is silent on the issue but I assume the plaintiff Miller had a vested interest in these plants. Anyway, in September 2009 six marijuana plants growing in the plaintiff’s back yard were stolen. In September 2011 another five plants were stolen from the back yard.
After each incident the plaintiff claimed under his home policy to recover the cost of the stolen plants. The insurer paid the claim up to a maximum of $1,000 per plant, relying upon the exclusion for trees, shrubs, and plants:
EXTENSIONS OF COVERAGE
15. Trees, shrubs and plants
Trees shrubs and plants being part of your landscaping on your premises. We will pay up to 5% of the limit of insurance applicable to your dwelling, subject to a maximum of $1,000 for any one tree, shrub or plant including debris removal. You are insured against loss cause (sic) by fire, lightning, explosion, impact by aircraft or land vehicle, riot, vandalism or malicious acts, theft or attempted theft.
The plaintiffs sued the insurer after each loss, taking the position that the stolen marijuana plants were actually personal property covered under the policy:
Coverage B – Personal Property (contents)
1. We insure the contents of your dwelling and other personal property you own, wear or use while on your premises which is usual to the ownership or maintenance of a dwelling.
The plaintiffs also asserted that the policy exclusion for plants didn't apply because the plants were not part of the "landscaping". The plaintiffs claimed that landscaping involves laying out plants (or other items) for aesthetic purposes, not for the purpose of growing medicine.
Aside from suing for the value of the stolen plants (apparently much more than $1,000 per plant), the plaintiffs also sued for $360,000 (twice at $180,000) for breach of contract, mental stress and physical pain, breach of fiduciary duty and infliction of mental and physical suffering.
The motions judge found that the claims were limited to $1,000 per plant, based on the policy exclusion for plants. He held that the provision for trees, shrubs and plants was put into the part of the policy that provides coverage for items that are not contents of the dwelling. He held it would be a stretch to find that the Contents section of the policy would cover items that were not contained in the dwelling. He also rejected the plaintiffs' argument that the marijuana plants were not part of the "landscaping" of the premises.
The moral of this case is: If you happen to get licensed to grow pot and need to store it in the backyard, get a few Dobermans.
In a recent preliminary issue hearing for Rampersaud and TD General Insurance Company (FSCO A11-002773, February 19, 2013), FSCO’s Arbitrator John Wilson was asked to determine whether an adult daughter was entitled to receive caregiver benefits for care provided to her elderly mother. Ms. Rampersaud’s mother was 78 years-old, and suffered from stage 6 Alzheimer’s, which meant she needed significant supervision.
Prior to being involved in a motor vehicle accident on July 6, 2009, Ms. Rampersaud and her two children moved into the same apartment building as her parents. With Ms. Rampersaud living in apartment 905, and her parents living in apartment 710, TD General denied Ms. Rampersaud’s entitlement to caregiver benefits because she was not residing with the person in need of care. According to section 13(1)the Schedule, caregiver benefits are available if at the time of the accident:
Whether Ms. Rampersaud’s mother was “a person in need of care” and whether Ms. Rampersaud was her mother’s primary caregiver were not at issue during the preliminary issue hearing. The only issue to be determined was whether Ms. Rampersaud was “residing with” her mother.
TD General noted that not only did Ms. Rampersaud not live in the same apartment as her parents, she lived on a different floor as their apartment. TD General did concede that Ms. Rampersaud had moved into her apartment with the intention of providing caregiver services in proximity to her parents.
Arbitrator Wilson noted that “residing with” is not defined in the Schedule or the Insurance Act. In his decision, Arbitrator Wilson looked at both English and French dictionary definitions of “reside.” He also noted that residence is often compared and contrasted with “domicile.” Finally, Arbitrator Wilson looked at the legislative purpose that gives context and meaning to the words “resides with,” which is the accident benefits system as a whole. He noted that it is accepted that the legislation giving access to the accident benefits system is a form of consumer protection, and should be liberally interpreted. Ambiguous words should be given their plain and ordinary meaning.
To determine the plain and ordinary meaning of residence, Arbitrator Wilson relied on tax court decisions. He quoted the decision in Lapierre v. The Queen, 2005 TCC 720, where Dassault J. found:
|To reside with someone is to live or stay with someone in a given place with a certain constancy, a certain regularity or else in an habitual manner.|
Arbitrator Wilson further relied on Dassault J’s decision to find that determination of whether or not Ms. Rampersaud was “residing with” her mother was a question of fact to be determined in the context of time, object, intention and continuity.
Although living in a separate apartment, Ms. Rampersaud cared for her parents before and after work, and on the weekends. There is also a noted that she assisted her father in dealing with her mother in her absence, though it is not clear what assistance was provided. Ms. Rampersaud maintained her own apartment for herself and her two children, but it is not clear how much care (if any) her children required. Her parent’s apartment was too small to accommodate herself and her children. Ms. Rampersaud’s mail was sent to her apartment, not her parents’ apartment.
Arbitrator Wilson did not accept TD General’s argument that the postal address necessarily governs residency. He pointed out that the opposite argument was not true, that separate and different residences or domiciles with the same address can and do exist. Arbitrator Wilson used that evidence, to support his implied conclusion that different addresses for one residence was also possible.
Arbitrator Wilson also noted that it made sense for Ms. Rampersaud to maintain her own postal address for the future, once she was no longer required to give care to her mother (implying that she did not reside at all in her own apartment with her children at the time of the accident). He noted that a speculation could be made that if the family had the financial resources, they would live in an extravagant estate in a posh neighbourhood, and there would be no question that they were “residing with” each other.
Since TD General had accepted that Ms. Rampersaud moved into her apartment to be near her parents to provide them with care, Arbitrator Wilson determined that by making the move, Ms. Rampersaud “sojourned, stayed, dwelt, or abide” with a person in need of care for an indeterminate time on a sustained basis. Arbitrator Wilson concluded that Ms. Rampersaud was “residing with” her mother, even though she would ultimately return to her own apartment in the same building. Specifically, Arbitrator Wilson found:
|Consequently, I accept that such a liberal interpretation of “reside” meets with the social welfare and consumer protection aspects of the Schedule. Under such an interpretation Ms. Rampersaud clearly “resided” with her parents at the time of the accident, as that term is used in the Schedule, and I so find.|
So in conclusion, since the determination is a matter of fact, Arbitrator Wilson was able to liberally interpret the Schedule and ultimately determine that you do not necessarily need to live in the same residence to be “residing with” someone for the purposes of the Schedule. So different apartments in the same building can be “residing with,” but what about living in townhouses in the same complex, or in semi-detached houses, or in detached houses beside each other, or on the same street, or in the same neighbourhood? This decision opens the door for many more liberal interpretations of “residing with” in the future.
Vishal Malaviya (“VN”) was covered under Ontario’s Statutory Automobile Policy (the “SAP”) for motor vehicle insurance through Jevco Insurance Company (“Jevco”), having opted for the minimum liability limit of $200,000, and having been sued for an amount in excess of same as a result of a motor vehicle accident that occurred on October 14, 2005 (the “action”). Jevco, in response, paid $200,000 to the plaintiffs in the action and brought an application before the Court seeking a declaration that it had no continuing obligation to defend VN as his liability limit was exhausted.
The application was dismissed on the basis that the Insurance Act (the “Act”) does not say, or even suggest, that an insurer must bear the cost of defending an insured only up to the liability limit. “[Q]uite the contrary, it provides that the defence costs of a claim are to be borne by the insurer. There is no limiting language in section 245”. Second, while the advisory in section 3.3.1 of the SAP informs insureds that they may retain their own counsel when facing a claim in excess of the liability limit; still, according to Justice Morgan of the Ontario Superior Court of Justice, this should be read as supportive of “the overall policy thrust of the Act – that is, as keeping the insurer and its chosen counsel on track in their defence of the insured, not as relieving them of their duty”.
See Jevco Insurance Co. v. Malaviya, 2013 ONSC 675.
Recently, the Ontario Court of Appeal considered an insurer’s obligation to indemnify its insured under an Ontario automobile policy in circumstances in which it was alleged that the insured intentionally caused harm to the Plaintiff.
In Savage v. Belecque, the 14-year-old Plaintiff, Amy Savage, had been skating at an outdoor rink with friends. Similarly, the 16 and 17-year-old Defendants, Shayne Poitras and Michel Belecque, had been playing hockey at the rink like many good ol’ Canadian boys do on a crisp January day. After their game, Michel and Shayne returned to Michel’s car, which was parked in a nearby parking lot. At the same time, Amy was searching the parking lot for “someone who would give her a smoke”, so she approached the Belecque car to ask Shayne through his open rear window. As Amy did so, Shayne reached out the window and, while engaging in “horseplay”, grabbed her by her jacket. Michel then accelerated the car with Amy, who was still wearing her skates, in tow. Amy was then dragged alongside the car for some distance while upright on her skates. When she was eventually released by Shayne, Amy’s momentum carried her a further 15 feet before she fell to the ground, fortunately uninjured.
Unfortunately for Amy, the teenage antics of Michel and Shayne did not end there. You see, shortly after sending Amy for a spill, Michel realized he had forgotten something at the rink and decided to go back to get it. However, Michel’s hockey skills apparently exceeded his common sense that day and instead of slowly turning around to retrieve his forgotten item like most of us would do, he executed what was referred to by the Court as a “high-speed doughnut”, which caused the car to spin. Regrettably, in the course of performing this super-cool manoeuvre, the Belecque car struck and injured Amy, who was still on the ground from her earlier fall.
As a result of the injuries she sustained in the accident, Amy sued Michel and Shayne for their actions, as well as their parents for negligently supervising their children and her own parents’ insurer, CGU Insurance Company of Canada (“CGU”) for uninsured and inadequately insured motorist coverage. In turn, the Belecques sued their insurer, Allstate Insurance Company of Canada (“Allstate”), which had denied them coverage for the accident, for a declaration that Allstate was obliged to provide coverage for the loss under their automobile policy. Allstate denied coverage under the automobile policy for various reasons, including its assertion that Michel’s actions were deliberate when he struck Amy while performing the doughnut.
The main action between Amy, Michel and Shayne eventually settled for $450,000. The only question that remained was which insurer was to fund the settlement. The answer to this question was dependant largely on whether Michel’s conduct was negligent (in which case he was covered by Allstate up to his $1 million policy limits) or whether he intentionally caused Amy’s loss (in which case coverage by Allstate would be excluded, except for the $200,000 statutory minimum limit). CGU, which was potentially liable as the excess insurer, therefore moved for summary judgment seeking a declaration that Allstate’s policy covered Michel.
The motion judge ultimately decided that in the circumstances of this case, Allstate had a duty to defend, as well as indemnify, Michel under the automobile policy. Allstate appealed this decision, arguing that Michel’s actions were deliberate when performing the doughnut, such that he was statutorily excluded from coverage.
The Duty to Indemnify
One of the primary issues for consideration by the Court of Appeal was Michel’s intention at the time of the accident, as this was determinative of whether the accident was excluded from coverage under the policy pursuant to section 118 of the Insurance Act, which excludes coverage for conduct contravening any criminal or other law “with the intent to bring about loss or damage”.
In support of its assertion that the accident was excluded from coverage, Allstate argued that Michel’s act of doing the doughnut was deliberate and, therefore, the harm sustained by Amy was caused intentionally. In support of this position, Allstate relied on Michel’s conviction for careless driving under the Highway Traffic Act, as well as the argument that Michel’s driving was so reckless that it amounted to an intentional act.
In deciding the case, the Court of Appeal distinguished between the intention to commit an act (i.e. intending to do a doughnut) and the intention to cause harm (i.e. intending to strike Amy with the car). The Court of Appeal held that while Michel’s act of doing the doughnut may have been intentional, there was no indication that he intended to harm Amy. In coming to this conclusion, the Court of Appeal was mindful of Michel’s “unshaken testimony” that he had absolutely no intention to harm Amy. This evidence was supported by Shayne and was not refuted by Amy. The Court of Appeal also observed that there was no animosity between any of the parties involved in the accident.
In the foregoing circumstances, the Court of Appeal held that Michel did not intend to bring about loss or damage to Amy, such that coverage was not excluded under the policy. As such, Allstate’s appeal was dismissed and it was required to fund the settlement of the main action.The Court of Appeal’s decision in Savage v. Belecque is significant for several reasons. First, it reminds us that insurers will often owe a duty to provide coverage for seemingly “intentional acts” so long as the harm that such acts cause is unintentional. Second, and perhaps more importantly, it reminds us that one must exercise extreme caution when executing radical moves like doughnuts in public places.
 Please note that this author and Miller Thomson LLP in no way endorse the performance of “doughnuts” or related vehicular activities. Such manoeuvres are dangerous and should be performed at the operator’s own risk.
Avis de non-responsabilité
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