THE MATTER OF AN ARBITRATION pursuant to
the INSURANCE ACT, R.S.O. 1990 c. I. 8 and Section 275
AND IN THE MATTER OF an
arbitration pursuant to Regulation 283/95
made under the Insurance Act, R.S.O. 1990, c. I. 8, as amended
AND IN THE MATTER of an arbitration pursuant to the Arbitration Act, S.O. 1991, c.17
ECHELON GENERAL INSURANCE COMPANY
- and -
AVIVA INSURANCE COMPANY
R. Pollack and Gabriel Flatt – Laxton, Glass LLP
Lawyer for the Applicant, Echelon Insurance Company
(hereinafter referred to as “Echelon”)
L. Boddy and Jessica Rogers – Evans, Philp LLP
Lawyer for the Respondent, Aviva Insurance Company
(hereinafter referred to as “Aviva”)
The issue before me in this loss transfer dispute is the determination of fault as between two drivers involved in a motor vehicle accident on June 2, 2011.
The Arbitration hearing proceeded on July 23, 2013 on the basis of Factums, the oral evidence of both drivers and both oral and written submissions.
A historical analysis of the development of the loss transfer regime is helpful in better understanding the issues herein. Although the standard Ontario automobile policy of insurance contained no fault benefits as early as 1972, the significant expansion of available no fault benefits came in 1990. The loss transfer regime (Section 275 of the Insurance Act) was introduced to redress the financial imbalance that was caused by the shifting of what was formally tort liability to no fault liability in the 1990 legislation. In the case of motorcycle insurers, it was accepted that their no fault burden was enhanced in comparison to the general population (due to the severity of injuries suffered by their insureds) and the tortfeasor’s liability was reduced. Accordingly, those insurers were awarded a right of loss transfer against all other insurers, to the degree of fault of the other insurers insured. It was similarly accepted that heavy commercial vehicles inflicted increased no fault liability on the insurers of other vehicles, so insurers of that class of vehicle were compelled to make loss transfer to the insurers of all other classes of vehicles to the degree of fault of their insured. These concepts are discussed in the following two cases:
Jevco Insurance Company v. Wawanesa Mutual Insurance Company (1998), 42 O.R. (3d) 276
Royal Insurance Company v. Wawanesa Mutual Insurance Company, (2004), 14 C.C.L.I. (4th) 314
Relevant portions of the enabling legislation to Ontario’s loss transfer regime, namely Section 275 of the Insurance Act, R.S.O. 1990, c.I.8, read as follows:
Indemnification in certain cases
275 (1) The insurer responsible under subsection 268 (2) for the payment of statutory accident benefits to such classes of persons as may be named in the regulations is entitled, subject to such terms, conditions, provisions, exclusions and limits as may be prescribed, to indemnification in relation to such benefits paid by it from the insurers of such class or classes of automobiles as may be named in the regulations involved in the incident from which the responsibility to pay the statutory accident benefits arose. R.S.O. 1190, c.I.8, S.275 (1); 1993, c.10, S.275 (1).
275 (2) Indemnification under subsection (1) shall be made according to the respective degree of fault of each insurer’s insured as determined under the Fault Determination Rules. R.S.O. 1990, c.I.9, S.275 (2).
Ontario Regulation 664/90, Section 9, sets out the parameters of the “insured-class condition” and defines the insurers between whom rights of indemnity exist. In essence, it provides that insurers of motorcycles and snowmobiles are entitled to indemnity from the insurer of any other vehicle (except motorcycles or snowmobiles), and that insurers of heavy commercial vehicles are obligated to indemnify any other insurer (except the insurer of a heavy commercial vehicle).
R.R.O. 1990, Regulation 664, Section 9, reads as follows:
INDEMNIFICATION FOR STATUTORY ACCIDENT BENEFITS (SECTION 275 OF THE ACT)
9. (1) In this section,
"first party insurer" means the insurer responsible under subsection 268 (2) of the Act for the payment of statutory accident benefits;
"heavy commercial vehicle" means a commercial vehicle with a gross vehicle weight greater than 4,500 kilograms;
"motorcycle" means a self-propelled vehicle with a seat or saddle for the use of the driver, steered by handlebars and designed to travel on not more than three wheels in contact with the ground, and includes a motor scooter and a motor assisted bicycle as defined in the Highway Traffic Act;
"motorized snow vehicle" means a motorized snow vehicle as defined in the Motorized Snow Vehicles Act”;
"off-road vehicle" means an off-road vehicle as defined in the Off-Road Vehicles Act;
"second party insurer" means an insurer required under Section 275 of the Act to indemnify the first party insurer. R.R.O. 1990, Reg. 664, s. 9 (1); 0. Reg. 780/93, ss. 1, 6.
(2) A second party insurer under a policy insuring any class of automobile other than motorcycles, off-road vehicles and motorized snow vehicles is obligated under Section 275 of the Act to indemnify a first party insurer,
(a) if the person receiving statutory accident benefits from the first party insurer is claiming them under a policy insuring a motorcycle and,
i) if the motorcycle was involved in the incident out of which the responsibility to pay statutory accident benefits arises, or
ii) if motorcycles and motorized snow vehicles are the only types of vehicle insured under the policy; or
(b) if the person receiving statutory accident benefits from the first party insurer is claiming them under a policy insuring a motorized snow vehicle and,
i) if the motorized snow vehicle was involved in the incident out of which the responsibility to pay statutory accident benefits arises, or
ii) if motorcycles and motorized snow vehicles are the only types of vehicle insured under the policy. R.R.O. 1990, Reg. 664, s. 9 (2); 0. Reg. 780/93, s. 1.
(3) A second party insurer under a policy insuring a heavy commercial vehicle is obligated under Section 275 of the Act to indemnity a first party insurer unless the person receiving statutory accident benefits from the first party insurer is claiming them under a policy insuring a heavy commercial vehicle. R.R.O. 1990, Reg. 664, s 9 (2) 0. Reg. 780/93, s.1.
It is Ontario Regulation 668/90 which establishes the “fault allocation condition”, commonly referred to as the Fault Determination Rules. The Fault Determination Rules provide an arbitrary allocation of liability created to regulate issues of liability allocation in the most common of situations. For those situations following outside the common situations, liability would be determined by ordinary principles of law.
The relevant Fault Determination Rules in the case before me are as follows:
1. Subsection 3 of Ontario Regulation 668 (the Fault Determination Rules) provides as follows:
3. 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 of the insured’s automobile of the point of contact with any other automobile involved in the incident.
Reference: Subsection 3 of Ontario Regulation 668
2. Subsection 5 of Ontario Regulation 668 provides as follows:
5.(1) If an incident is not described in any of these rules, the degree of fault of the insured shall be determined in accordance with the ordinary rules of law.
5.(2) If there is insufficient information concerning an incident to determine the degree of fault of the insured, it shall be determined in accordance with the ordinary rules of law unless otherwise required by these rules.
Reference: Subsection 5 of Ontario Regulation 668
3. Subsections 10(1) and 10(4) of Ontario Regulation 668 provide as follows:
10.(1) This section applies when automobile “A” collides with automobile “B”, and both automobiles are travelling in the same direction and in adjacent lanes.
10.(4) 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.
10.(5) If the accident occurs when automobile “A” is turning left at an intersection and automobile “B” is overtaking automobile “B” to pass it , the driver of automobile “A” is 25% at fault and the driver of automobile “B” is 75% at fault for the incident.
Reference: Subsections 10(1), (4) and (5) of Ontario Regulation 668
Both counsel were in agreement as to the general principles to be applied in determining fault in a loss transfer situation as described in the paragraphs below.
The purpose of the legislative scheme under section 275 of the Insurance Act and Regulation 668 is to provide for an expedient and summary method of reimbursing the first party insurer for payment of no fault benefits from the second party insurer whose insured was fully or partially at fault for an accident. The fault of the insured is to be determined strictly in accordance with the Fault Determination Rules, prescribed by Regulation 668.
Reference: Jevco Insurance Co. v. York Fire & Casualty Co.,  O.J. No. 646 (C.A.)
Tab 7 of the Applicant’s Written Submissions
Reference: Jevco Insurance Co. v. Canadian General Insurance Co.,  O.J. No. 1774
The Fault Determination Rules contained in Regulation 668 set out a series of general types of accidents and to facilitate indemnification without the necessity of allocating actual fault, they allocate fault according to the type of a particular accident in a manner that, in most cases, would probably but not necessarily correspond with actual fault. The thrust of the Fault Determination Rules is based on well established rules of the road to determine the probability of fault.
Reference: Jevco Insurance Co. v. York Fire & Casualty Co.,  O.J. No. 1352
The Fault Determination Rules are to be liberally construed and applied. Fault determination under the rules is indifferent to factors which would apply under the ordinary rules of tort law.
Reference: Co-operator’s General Insurance Co. v. Canadian General Insurance Co.,  O.J. No. 2578
The purpose of the legislation is to spread the load among insurers in a gross and somewhat arbitrary fashion, favouring expedition and economy over finite exactitude.
Reference: Jevco Insurance Co. v. York Fire & Casualty Co.,  O.J. No. 646 (C.A.)
A common sense approach is to be used when considering the Fault Determination Rules and the diagrams in the regulation.
Reference: Royal & SunAlliance Insurance Company v. Axa Insurance Company, Arbitrator Bruce Robinson, November 21, 2003
It must first be determined whether there is a Fault Determination Rule to deal with the accident. If not, then negligence must be determined using “the ordinary rules of law”. It is clear that the insurance industry, with the force of regulation, have agreed to not worry about the odd inequity created by arbitrariness of these rules in order to make these decisions as simple and cost effective as possible. The rules should be interpreted liberally to accord with the industry’s desire to resolve these disputes in a simple manner.
Reference: State Farm Mutual Insurance Company v. CGU Insurance, Arbitrator J.T. Fidler, April 16, 2001
In the context of this legislation and the legal principles outlined above, Echelon (insurer of the motorcyclist Weaymouth) would be entitled to be indemnified for the benefits paid to it’s insured to the extent that the truck driver Watson was responsible for the collision herein either by application of the Fault Determination Rules or the ordinary rules of negligence in the event no Fault Determination Rule is found to be applicable.
On June 2, 2011, an accident took place between a motorcycle insured by Echelon General Insurance Company (“the Echelon motorcycle”) and a flatbed truck insured by Aviva (“the Aviva transport truck”). The collision took place on King St. West at it’s intersection with Wentworth Street, in the City of Hamilton. The collision occurred while the truck was making a left turn from westbound King onto southbound Wentworth.
The Echelon motorcycle was a Harley Davidson that was being operated by Terry Weaymouth.
The Aviva truck was a Freightliner cab hauling an empty 48 foot flatbed trailer. It was being operated by Steve Watson.
King St. West (hereinafter referred to as “King”) is a one way street with four westbound lanes. For the purposes of this decision the lane to the extreme left will be lane 1 and the lane to the extreme right lane 4. Wentworth Street (hereinafter referred to as Wentworth) is a one way street with 3 southbound lanes. The intersection is governed by a traffic signal.
The collision occurred during daylight hours. The weather was clear and dry. It was rush hour traffic. At all times the traffic light governing westbound traffic remained green.
The collision occurred while the truck was in the process of turning left from westbound King onto southbound Wentworth.
The operator of the flat bed truck Steven Watson testified that he was in Hamilton to pick up some machinery. He went to one location but the machinery there was not ready for loading. He was on his way to another location up the mountain on Rymal Road when the collision occurred. He had been to Hamilton a couple of times per month and was “a little familiar with it”. He was travelling with the assistance of a GPS device. He testified that he was not relying fully on the GPS device.
Watson turned onto King a couple of blocks east of where the collision occurred. He made a right turn onto King. According to his evidence he made it over all four lanes into lane 1 and had reached a speed of 45 – 55 km/h but was faced with a parked vehicle. This was about a quarter mile from the point of the ultimate collision. He moved into lane 2 and continued west. Two or three seconds after passing the parked car he claims that he put on his left turn signal as he intended to turn left at Wentworth. He claimed he travelled another five minutes before the collision occurred. He testified that he pulled part way into lane 1. There was no specific evidence given as to whether he pulled in a few inches or several feet. He was aware of three vehicles behind him in lane 2. There was a Pepsi truck (about 20 ft long) followed by two automobiles. He made this observation from his side view mirrors. His description under cross examination as to what he saw in his mirrors at that point made no mention of a motorcyclist.
Watson first saw the motorcycle about three to five seconds before impact. He saw the motorcycle “flying down the road”. He first saw the motorcycle through his driver’s door window. He had just started his left turn and was travelling slowly. He applied his brakes and came to a stop partially blocking lane 1. The motorcyclist could not stop and collided with the steps of the stopped cab portion of the Watson vehicle. The collision occurred in lane 1.
In cross-examination, Watson was presented with a statement he gave to police following the collision. He admitted giving the statement to police. The statement indicated that he applied his turn signal. As he approached Wentworth he slowed to the point where the Pepsi truck stopped behind him. He started to make the left turn and noticed the motorcycle doing about 55-60 km/h. The statement makes no mention of the parked car that he described in his arbitration evidence. The statement makes no mention of straddling lane 1 and lane 2. Other than what may be inferred from the stopped Pepsi truck behind him, there is no reference in the statement as to which lane he was in when commencing his turn.
The operator of the motorcycle insured with Echelon was a retired gentleman licensed to operate a motorcycle for 46 years. He testified that he was on his way to volunteer at the Food Bank which he was doing twice weekly. He travelled the King St. route daily. It was rush hour. He was travelling at 35–40 km/h with the flow of traffic. He was travelling in lane 1 where there were fewer sewer grates for him to avoid. The only other vehicle in lane 1 was a dark coloured automobile about 1½ blocks ahead. As he approached Wentworth there were three vehicles ahead of him to his right in lane 2. There was a Volvo automobile following a Pepsi truck and a flat bed truck in front of the Pepsi truck. He was at a speed greater than these vehicles and continued in lane 1. When he was about ten feet from the intersection with Wentworth, the flatbed started turning left from lane 2. He observed the operator of the truck catch him out of the corner of his eye and stop. Weaymouth only had time to brake but could not avoid striking the cab of the flatbed truck which had encroached into lane 1. The truck was only stopped for about two or three seconds before impact. He did not have time to gear down.
In cross-examination, Weaymouth admitted that he did not observe the left turn signal that the operator of the flatbed claims to have activated. He explained that the turn signal lights would have been low on the flatbed and his view may have been blocked by the Pepsi truck which was right behind the flatbed.
ANALYSIS AND FINDINGS
I must first determine whether a Fault Determination Rule applies before considering any application of the ordinary rules of negligence.
The Applicant Echelon maintains that this was a straightforward lane change situation governed by Rule 10(4) where the vehicle making the lane change is 100% responsible.
The Respondent Aviva maintains that it is Rule 10(5) which is applicable. This Rule involves accidents involving a left turning vehicle and an overtaking vehicle. The Rule makes the driver of the overtaking vehicle 75% at fault. In the alternative, the Respondent Aviva submits that neither Rule is applicable and that I have to apply the ordinary rules of negligence. In submissions, counsel for Aviva abandoned argument that it might be Rule 6(2) that would be applicable.
On the evidence before me, I find that Rule 10(4) applies to the fact situation presented to me making the operator of the flatbed fully responsible for the collision as per the Fault Determination Rule. I realize that a different finding of liability might result if it were necessary to apply the ordinary rules of negligence. In determining whether a Fault Determination Rule applied I did not have to consider the speed of the motorcycle or whether there was negligence for not seeing a turn signal that the driver of the truck claims to have been activated. I did not have to consider whether the motorcyclist ought to have slowed down in light of the fact that traffic to his right was slowing down considerably. All I had to do is determine whether one of the Fault Chart Rules best described how this accident occurred.
I did not find Rule 10(5) of the Fault Determination Rules applicable as it involved situations where the overtaking vehicle has moved into the oncoming lane of travel. That was not the case here. There is a diagram depicted below Rule 10(5) and it clearly shows the overtaking vehicle moving into the oncoming lane of traffic as opposed to a vehicle overtaking another, such as on a one way street, while travelling in the same direction in adjoining lanes. It specifically uses the words “overtaking to pass”. I am of the view that Rule 10(5) is applicable to situations where the overtaking vehicle has to enter the oncoming lanes to pass and not the situation here.
The facts here are not consistent with the “wide turning vehicle cases” referred to me by counsel for the Respondent Aviva. This not a situation where the flatbed was clearly established in lane 1 and simply angled partially into lane 2 so as to make his left turn. This is a case where the flat bed was clearly established in lane 2 and was making his way into lane 1 so as to complete the left turn. In my view it occurred while the truck was moving from lane 2 into lane 1 as described by Rule 10(4). The lane change was simply required for him to complete his intended left turn since it was commenced, in my view, while the truck was either predominantly or fully in lane 2.
In reaching my conclusions it was necessary for me to consider the credibility of the two drivers. I found Terry Weaymouth to be a persuasive and convincing witness. He presented as a soft spoken, articulate retired gentleman most familiar with King Street West in Hamilton. He was unlike the stereotypical “biker” that one might imagine. I was not as impressed with Steve Watson. He came across as being relatively unfamiliar with the Hamilton roadways. His evidence kept changing. At one point he said he reached a speed of 50 – 55 kph on King then later stated he reached a maximum speed of 45 – 50 kph. At one point he said he had been on King for 20 – 25 minutes before the accident then later testified that he had only travelled a couple of blocks on King before the collision. At one point he testified that after initiating his turn signal he travelled for about 5 minutes on King yet on his own evidence it would have been less than 1/4 mile. He testified at the arbitration that he had moved part way into lane 1 before making his turn yet makes no mention of this in his statement to police even though in my view this would be an important piece of evidence. Overall, I prefer the evidence of Weaymouth to that of Watson.
I find that the motorcyclist was travelling in lane 1 as it approached Wentworth. He was slowly overtaking the vehicles in the lane to his right consisting of the Volvo automobile, the Pepsi truck and the flat bed driven by Watson. On the approach to Wentworth, I find that the flat bed was in lane 2 or at least predominantly in lane 2. Numerous times Watson spoke of the Pepsi truck behind him. I accept the evidence of Weaymouth that the Pepsi truck was in lane 2. I am not satisfied that Watson moved part way into lane 1 well before the intersection. If he did, the encroachment into lane 1 was not significant and certainly not enough to characterize it as being anything but still “travelling in lane 2”. In his statement to police it is indicated that “he activated his turn signal, there was a Pepsi truck behind him, he then started to make his left turn.” I find that at the time of the collision he was essentially moving from lane 2 into lane 1. It was a lane change required in order to make his intended left turn.
The most telling piece of evidence as to how this collision occurred emanated from the cross-examination of Watson. He admitted in cross-examination that when he first saw the motorcycle the observation was made through his drivers door window and not his rearview mirrors. To make such observation the cab of his vehicle would have had to been on at least a 45 degree angle. In other words, the left turn or lane change was commenced before he ever observed the motorcycle.
In finding that Rule 10(4) of the Fault Determination Rules is applicable to the fact situation before me I have kept in mind that the purpose of the legislation is to spread the load among insurers in a gross and somewhat arbitrary fashion, favouring expedition and economy over finite exactitude realizing that there may well be a different liability split if one were to apply the ordinary rules of negligence. Rule 10 (4) requires me to attribute fault to the vehicle making the lane change on a 100% basis.
ORDERIn light of the findings aforesaid, I hereby order that Aviva reimburse Echelon for all accident payments, properly the subject matter of indemnity, together with appropriate interest calculated in accordance with the Courts of Justice Act. I order that Aviva pay to Echelon it’s legal costs on a partial indemnity basis. I order that Aviva pay the costs of the Arbitrator. In the event that the parties are unable to resolve issues of indemnity, interest and costs, I would be pleased to remain involved.
DATED at TORONTO this 29th )
of July , 2013. ) ______________________________________
KENNETH J. BIALKOWSKI