IN THE MATTER OF THE INSURANCE ACT,
R.S.O. 1990, c. I. 8, as AMENDED and
REGULATION 283/95 MADE UNDER THE INSURANCE ACT

AND IN THE MATTER OF THE ARBITRATION ACT, S.O. 1991, c.17

AND IN THE MATTER OF AN ARBITRATION

BETWEEN:

INTACT INSURANCE COMPANY OF CANADA

Applicant

- and -

ECONOMICAL MUTUAL INSURANCE COMPANY

Respondent

DECISION

 

COUNSEL

Joseph Lin
Lawyer for the Applicant, Intact Insurance Company of Canada
(hereinafter referred to as “Intact”)

Mr. Paul Kiddey
Gilbert, Kirby, Stringer LLP
Lawyer for the Respondent, Economical Mutual Insurance Company
(hereinafter referred to as “Economical”)

 

ISSUE

In the context of a priority dispute pursuant to the provisions of the Insurance Act R.S.O. 1990, c.I.8, the issues before me are whether the infant claimant Ruby Mayes-Hanna was principally dependent for financial support or care on Meghan McKenna (Intact’s insured) and secondly, was the mother of the infant claimant Lacey Mayes a “spouse” of Meghan McKenna. If either could be established then Intact would stand in priority as the infant claimant would be considered an “insured person” under the Intact policy. Otherwise, Economical, as insurer of the vehicle in which the infant claimant was an occupant would stand in priority.

It is essentially a claim involving “spousal” and “dependency” issues.

 

PROCEEDINGS

This Arbitration proceeded on the basis of Document Briefs, Books of Authorities and Written Submissions.

 

APPLICABLE LEGISLATION

A priority dispute arises when there are multiple motor vehicle liability policies which might respond to a statutory accident benefit claim made by an individual involved in a motor vehicle accident. Section 268 (2) of the Insurance Act sets out the priority rules to be applied to  determine which insurer is liable to pay statutory accident benefits.

Since the claimant Ruby Mayes-Hanna was an occupant of a vehicle at the time of the accident, the following rules with respect to priority of payment apply:

(i)              The occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured;

(ii)             If recovery is unavailable under (1), the occupant has recourse against the insurer of the automobile in which he or she was an occupant;

(iii)            If recovery is unavailable under (1) or (2), the occupant has recourse against the insurer of any other automobile involved in the incident from which the entitlement to statutory accident benefits arose;

(iv)           If recovery is unavailable under (1), (2) or (3), the occupant has recourse against the Motor Vehicle Accident Claims Fund.

Section 2 (1) of the Statutory Accident Benefits Schedule – Accidents On or After November 1, 1996, Ontario Regulation 403/96, as amended, defines an “insured person” as follows:

(a)            “The named insured, any person specified in the policy as a driver of the insured automobile, the spouse of the named insured, and any dependant of the named insured or spouse, if the named insured, specified driver, spouse or dependant

(i)              is involved in an accident in or outside of Ontario that involves the insured automobile or another automobile.”

Section 2 (6) of the Statutory Accident Benefits Schedule – Accidents On or After November 1, 1996, Ontario Regulation 403/96, as amended, reads as follows:

“For the purposes of this regulation, a person is a dependant of another person if the person is principally dependant for financial support or care on the other person or the other person’s spouse.”

Spouse is defined under section 224(1) of the Insurance Act:

            “spouse” means either of two persons who,

            (a)        are married to each other,

(b)        have together entered into a marriage that is voidable or void, in good faith on the part of the person asserting a right under this Act, or

            (c)        have lived together in a conjugal relationship outside marriage,

                        (i)         continuously for a period of not less than three years, or

(ii)        in a relationship of some permanence, if they are the natural or adoptive parents of a child; (“conjoint”)

 

FACTS

On October 5, 2012, the 3½ year old infant claimant, Ruby Mayes-Hannah (d.o.b: February 24, 2009) was a passenger in a motor vehicle insured by the Respondent, Economical involved in a motor vehicle collision.

At the time of the Accident, the infant claimant Ruby Mayes-Hannah was living with her mother, Lacey Mayes (d.o.b.: May 29, 1984) and Meghan McKenna (d.o.b: June 8, 1986).  They were all residing together at 5561 Buchanan Avenue in Niagara Falls, Ontario. The evidence suggests that Meghan and Lacey shared household expenses equally. The evidence suggests that they shared in the care of Ruby equally.

Lacey, the mother of the infant claimant, did not have a driver’s license and was not a named insured or listed driver on any automobile policy of insurance.  Meghan had a valid policy of automobile insurance with the Applicant, Intact on the date of the Accident. Ruby’s father, David Hannah has not been present in her life since she was born.

Following the accident, an Application for Accident Benefits (OCF-1) dated October 15, 2012 that was submitted on behalf of Ruby to Intact. As required by the provisions of the Insurance Act Intact commenced paying statutory accident benefits to the infant claimant and initiate steps to have Economical declared the priority insurer.

Intact presented Economical with a Notice to Applicant of Dispute Between Insurers dated October 23, 2012.

Intact commenced the within Arbitration by delivering to Economical a Notice to Submit to Arbitration dated April 23, 2013.

Intact has adjusted and continues to adjust the Accident Benefits claim of Ruby Mayes-Hannah while seeking a declaration that Economical is the priority insurer.

 

ANALYSIS AND FINDINGS

A.  SPOUSAL ISSUE

Intact takes the position that their insured Meghan and the mother of the infant claimant Lacey were not “spouses” as defined in the Insurance Act. At risk of oversimplification they take the position that they “have not lived in a conjugal relationship continuously for a period of not less than three years” nor “in a relationship of some permanence as adoptive parents” as required by the definition of spouse in s. 224 of the Insurance Act :

“spouse” means either of two persons who,

            (a)        are married to each other,

(b)        have together entered into a marriage that is voidable or void, in good faith on the part of the person asserting a right under this Act, or

            (c)        have lived together in a conjugal relationship outside marriage,

                        (i)         continuously for a period of not less than three years, or

(ii)        in a relationship of some permanence, if they are the natural or adoptive parents of a child; (“conjoint”)

 

The evidence before me is clear that Intact’s insured Meghan and the mother of the infant claimant  Lacey were not married nor had entered into a marriage that was void or voidable.

The evidence before me is clear that the two of them had not lived in a conjugal relationship outside of marriage continuously for a period of three years. The mother of the infant claimant testified on her examination for discovery that she started living with Intact’s insured sometimes in the summer of 2010. The subject accident took place on October 5, 2012. They had been living together for only 2½ years. The fact that they had not been living together for three years was also corroborated by Intact’s insured Meghan on her examination for discovery.

I am satisfied on the evidence before me however that they were at the time of the accident in a “conjugal relationship” having applied the criteria set out in M.v.H. [1999] 2 S.C.R. 3. with such criteria including:

a)     duration of relationship;

b)     existence of children;

c)     stability of relationship;

d)     interdependence of the parties;

e)     cohabitation;

f)      conjugal relationship;

g)     personal relations;

h)     responsibility for household services;

i)      interaction in a family and social context;

j)      financial arrangements and support;

k)     responsibility towards children;

l)      temporary interruptions in physical living arrangements;

m)   the expectations of the parties; and,

n)     the intention of the parties.

 

It is then necessary to look at whether Intact’s insured Meghan qualifies as “spouse” as being in “a relationship of some permanence” and being the “adoptive parent” of the infant claimant.

The examination for discovery evidence is clear that the infant claimant was never formally adopted by Intact’s insured. Economical maintains that a formal adoption is not necessary to qualify as “adoptive parent” and all that is necessary to show is that the individual has stepped into the shoes of a parent with a settled intention to treat the child as a child of the persons family.

It is important to note that “adoptive parent” is not defined in the legislation.

I am satisfied on the evidence before me that the two of them were in “a relationship of some permanence”. They had been dating for about four years having met online some time in 2007. They had been living together for more than two years (but less than three). This leaves the crucial issue as to whether Intact’s insured Meghan was an “adoptive parent”.

There is considerable evidence contained in the examination for discovery transcripts that at the time of the accident Lacey and Meghan looked after Ruby on a 50/50 basis. They shared care duties. They shared expenses financially. The infant claimant called Meghan “Mamma” and her biological mother Lacey “Mommy”. Meghan and Lacey had talked about a formal adoption but they did not think the biological father would ever give up his rights and no steps were ever taken. On the evidence before me I am satisfied that Meghan was treating the infant claimant as her daughter.

Despite the evidence and my findings in the paragraph above, I am of the view that meaning must be given to the use of the word “adoptive” in paragraph (c) (ii) in the definition of “spouse” in s. 224 of the Insurance Act.

“spouse” means either of two persons who,

            (a)        are married to each other,

(b)        have together entered into a marriage that is voidable or void, in good faith on the part of the person asserting a right under this Act, or

            (c)        have lived together in a conjugal relationship outside marriage,

                        (i)         continuously for a period of not less than three years, or

(ii)        in a relationship of some permanence, if they are the natural or adoptive parents of a child; (“conjoint”)

I am satisfied that to qualify under that paragraph there must be a formal adoption. If the legislators intended to include individuals “who had demonstrated a settled intention to treat the child as a child of his or her family” those very words could have been used, as opposed to “adoptive parents”, just as they are used in the definition of “parent” in the Family Law Act which includes a person “who has demonstrated a settled intention to treat a child as a child of his or her family”.

        Section 1 of the Family Law Act defines,

“parent” to include a person who has demonstrated a settled intention to treat a child as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody.

 

Instead, the legislators used the word “adoptive” as an adjective to the word “parents” to which meaning must be given.  Courts have generally assumed that the words of a statute mean what an “ordinary” or “reasonable person” would understand them to mean. I am satisfied that an “ordinary” or “reasonable person” would understand “adoptive” to mean “having formally adopted” . I find the word “adoptive” to be plain and unambiguous and should be given it’s ordinary meaning. As I have indicated, this must mean “having formally adopted”.

I find that at the time of the accident Meghan and Lacey were not “spouses” as defined in the Insurance Act.

 

B.  DEPENDENCY ISSUE

The Respondent Economical takes the position that the infant claimant was “principally dependant for financial support or care” on Intact’s insured Meghan McKenna. If so found, the infant claimant would be an “insured person” under Intact’s policy of insurance and Intact would stand in priority to Economical. Intact maintains that the infant claimant remained at all times principally dependant on her biological mother Lacey Mayes and not it’s insured Meghan McKenna.

Dependency is defined in the s. 2(6) of the Statutory Accident Benefits Schedule O. Reg 403/96 as:

“For the purpose of this Regulation, a person is a dependent of another person if the person is principally dependent for financial support or care on the other person or the other person’s spouse.”

The Ontario Court of Appeal affirmed the “correct legal principles” to be applied to questions of dependency in Oxford Mutual Insurance Company v. Co-operators General Insurance Company (2006) O.J. No.4518. This decision incorporated some of the principles from earlier decisions involving dependency namely Miller v. Safeco 1986, 13 C.C.L.I. 31, 50 O.R. (2d) 797 (C.A.) and Liberty Mutual Insurance Co. v. Federation Insurance Co. of Canada [1997] O.J. No.1234 (C.A.).

The “correct legal principles” set out in Oxford Mutual v. Co-operators (supra) can be summarized as follows:

(a)        The 51% principle from Liberty Mutual Insurance v. Federation Insurance should be applied.  It is not sufficient that the claimant simply be dependent, but rather must be principally dependent.  If the claimant had sufficient resources to fund 51% of their financial needs then the person could not be dependent upon others.

(b)        The time frame to be looked at may encompass days, weeks or even years.  One does not simply look at a “snap shot” of the actual day of the Accident to determine the issue of dependency.

(c)        The factors from Miller v. Safeco should be considered:

(i)              the duration of the dependency

(ii)            the amount of dependency

(iii)           the financial or other needs of the alleged dependent

(iv)           the ability of the alleged dependent to be self-supporting.

(d)        Each case must be factually driven.

(e)        The ability to be self-supporting must be taken into account when measuring dependency.

The evidence before me confirms that both Meghan and Lacey shared household expenses on a 50/50 basis.

As for income the tax returns indicate the following incomes for Meghan and Lacey for the years leading up the  collision of October 5, 2012:

 

Year

Meghan McKenna’s Income

Lacey Maye’s Income

 

2009

 

T4: $4,497.00
Social Assistance: $1,715.00
Total: $6,215.00

 

Childcare Benefit: $1,000.00

E.I.: $8,155.00
Total: $9,155.00

 

2010

 

T4: $467.00

 

Note: T4s and T4A appended indicate the following amounts:

 

  •   T4:   $41.60
  •   T4:   $426.00
  •   T4A: $1,989.00
  •   TOTAL: $2,456.60

 

 

T4: $2,635.00
Childcare Benefit: $1,200.00
E.I. $175.00
Social Assistance: $4,254.00

Total: $8,264.00

 

 

In the two years pre-dating the collision each of them earned a total of approximately $22,000 to $24,000 with Lacey, the biological mother of the claimant, earning slightly more. Counsel for the Respondent has provided a report from the Fraser Institute dated September 2013 indicating that the cost of raising a child of Ruby’s age is between $3,000 and $4,500. Clearly the two of them had sufficient sources of income to provide financially for Ruby. If providing for Lacey equally it cannot be said that Lacey was more than 50% dependant on Meghan.

The Respondent Economical takes the position that the government support received by Lacey cannot be considered in determining the question of dependency and relies on the decision of Geico Insurance Company v. Aviva Insurance Company of Canada a decision of arbitrator Samis dated April 19, 2010. They argue that when one removes the government assistance from the equation the infant claimant would have been principally financially dependant on Meghan as her T4 income vastly exceeded that of Lacey’s T4 income.

I do not believe that  Geico v. Aviva (supra) supports the proposition advanced by Economical. It involved a situation where it was argued that the injured claimant herself was principally financially dependant on social welfare benefits funded by the Government of Ontario and that any policy of motor vehicle liability insurance where the Government of Ontario was a named insured ought stand in priority. The decision turned on whether the government could be considered a “person” within the meaning of the SABS

Section 2 (6) of the Statutory Accident Benefits Schedule – Accidents On or After November 1, 1996, Ontario Regulation 403/96, as amended, reads as follows:

“For the purposes of this regulation, a person is a dependant of another person if the person is principally dependant for financial support or care on the other person or the other person’s spouse.”

In Geico v. Aviva (supra) It was held that that for the purposes of determining priority and status as an insured person, dependency between the actual person and a corporate/governmental entity is not contemplated by s. 2(6) of the SABS. As a result, an injured claimant who derived support from a government agency cannot look to policies of automobile insurance issued to the government body for the purpose of access to statutory accident benefits. In my view, it does not stand for the proposition that I am to exclude social assistance or other government benefits paid to a person that the injured claimant is alleged to be dependant upon. I am satisfied that I can look to all sources of income to determine financial dependency in the present fact situation including the childcare and social assistance benefits that Lacey was receiving at the time of the accident.

In the final analysis, I find that there is insufficient compelling evidence to displace Lacey (the infant claimant’s biological mother) as Ruby’s primary caregiver and person primarily responsible for financial support.

 

 

ORDER

On the basis of my findings It is hereby ordered that Economical is the priority insurer. I order that Economical assume responsibility for the payment as statutory accident benefits to and on behalf of Ruby Mayes-Hanna and reimburse Intact for the accident benefits paid to or on behalf of Ruby Mayes-Hanna, properly the subject matter of reimbursement, together with interest calculated pursuant to the Courts of Justice Act. I order that Economical pay to Intact the costs of this arbitration proceeding on a partial indemnity basis. I order that Economical pay the arbitrators costs.

I will remain involved if the parties cannot resolve the issues of indemnity, interest or costs.

 

 

 

 

DATED at TORONTO this 17th     )

day of  July, 2014.                          )            ______________________________________
                                                                        KENNETH J. BIALKOWSKI
                                                                        Arbitrator