IN THE MATTER of the Insurance Act, R.S.O. 1990,
c.I.8, s. 268 and Regulation 283/95 thereunder;

AND IN THE MATTER of the Arbitration Act, 1991,
 S.O. 1991, c.17;

  AND IN THE MATTER of an Arbitration between:

 

UNIFUND ASSURANCE COMPANY

Applicant

- and -

INTACT INSURANCE COMPANY

Respondent

 

DECISION

 

COUNSEL

Mark K. Donaldson
Counsel for the Applicant, Unifund Assurance Company
(hereinafter referred to as “Unifund”)

Joseph Lin
Counsel for the Respondent, Intact Insurance Company
(hereinafter referred to as “Intact”)

 

ISSUE

In the context of a priority dispute between insurers pursuant to s.268 of the Insurance Act, R.S.O. 1990, c.I.8, the issue before me is whether the claimant was an “insured person“ under the Unifund policy.

The claimant, Natalie Giamos (“Giamos”) was struck as a pedestrian on March 30, 2012. The striking vehicle was insured by the Respondent, Intact Insurance Company (“Intact”).

Giamos’ Application for Accident Benefits was submitted to the Applicant, Unifund Assurance Company (“Unifund”) as purported insurer of Giamos’ mother, Andrea Brunswick (“Andrea”).

Unifund disputes that the claimant Giamos would be considered an “insured person” under their policy. Specifically, Unifund takes the position that although the claimant Giamos was dependent upon her mother Andrea, the named insured on the Unifund policy was Blanche Brunswick (“Blanche”). Blanche was Andrea’s mother and the claimant Giamos’ grandmother. The named insured under the Unifund policy, Blanche Brunswick, had died some six years earlier but the policy was never changed. Throughout, the claimant’s mother Andrea was the principal and sole driver of the insured vehicle. Unifund maintains that as Andrea was only a person specified in the policy as a “driver” of the insured automobile, any dependent would not meet the definition of “insured person” under the Statutory Accident Benefits Schedule (SABS). Only a dependent of the “named insured” would be considered an “insured” under the policy.

If not an “insured” under the Unifund policy then Intact, as insurer of the striking vehicle, would stand in priority.

 

PROCEEDINGS

 

The matter proceeded before me on the basis of  a Document Brief, Examination Under Oath transcripts, Written Submissions, Books of Authority and oral argument which took place on March 30, 2015.

 

FACTS

Background of Priority Dispute

On March 30, 2012, the Claimant, Natalie Giamos (d.o.b: October 27, 1997) was a pedestrian in the City of Toronto. The Claimant was struck by a motor vehicle insured by Intact.

At the time of the Accident, the 14 year-old Claimant was dependent on her mother, Andrea Brunswick (“Andrea”).

Following the Accident, the Claimant completed an Application for Accident Benefits (OCF-1) dated April 17, 2012 that was submitted to Unifund.

Unifund presented Intact with a Notice to Applicant of Dispute Between Insurers, dated April 18, 2012.

Unifund commenced the within Arbitration by delivering to Intact a Notice of Commencement of Arbitration dated January 25, 2013 initiating the present priority dispute.

Unifund has adjusted and continues to adjust the Accident Benefits claim of Natalie Giamos.

 

Background of Unifund Insurance Policy

Andrea arranged for car insurance in early 2005. At the time Andrea had earlier declared bankruptcy and could only own a motor vehicle of certain value. The value of the vehicle on which the insurance was being arranged was considerable higher than that allowed. Ownership of the subject vehicle, which Andrea had received as a gift, was therefore placed in the name of her mother Blanche. Andrea disclosed to the broker that she was the only driver and that her mother was blind and could not drive. Her mother was 82 years of age and in poor health. Andrea believes she told the broker about her bankruptcy. I could find no reference to a bankruptcy in the underwriting file. Blanche signed the original insurance documents and helped Andrea with the payments. When the policy was first set up Blanche provided the void cheque to the broker. Blanche was shown as the applicant on the application for automobile insurance. Blanche was shown as the “named insured”, but it was  Andrea that dealt with the insurance agency. The premium rating on the policy would be the same regardless of whose name the ownership of the vehicle was in as it would be based upon the driving record of the listed drivers and in this case Andrea was the sole driver. Correspondence from the brokerage was sent to Blanche at the last address provided. The evidence of the broker was that it is not unusual for a policy to be issued to an individual who holds ownership of the vehicle where the vehicle is actually being used exclusively by another driver.

The original policy of insurance secured through the brokerage was underwritten by Economical Insurance. This policy was in effect on or about February 4, 2005. Even on some of the insurance documents prepared by the broker back in 2005, Andrea was referred to as the insured yet each of those documents was signed by Blanche. The policy was consistently renewed with Blanche shown as the named insured. Andrea testified that the broker never spoke to her mother.

Blanche Brunswick passed away on July 29, 2006. Neither the broker nor the insurer Economical were advised. The policy continued to be renewed each year showing Blanche as the named insured despite her death. Andrea was not involved in the administration of her mother’s estate. It does not appear that the Chrysler passed through her mother’s estate.  Even when Andrea was ultimately discharged from bankruptcy the broker was never advised. No steps were taken to put the ownership of the subject vehicle in Andrea’s name after her discharge from bankruptcy and before the subject accident.

The broker did provide Andrea with a multi-line discount on January 6, 2007 when she applied for tenant’s insurance. The broker was not advised by Andrea at that time that her mother had passed away.

In 2011, the broker was bought out by another broker and the policy of insurance was switched from Economical to Unifund. When the Unifund policy was renewed for the period February 4, 2012 to February 4, 2013 Blanche was shown as “named insured” and Andrea as “listed driver”. The subject accident occurred on March 30, 2012.

The broker only ever dealt with Andrea on insurance issues related to the car. Unifund (through its broker) never received written consent from Blanche to deal with Andrea for insurance related matters.

The subject accident occurred on March 30, 2012. The insurer only became aware that Blanche had died after Giamos’ accident. This was likely in June or July of 2012 or almost six years after her death. The brokerage asked Andrea what she was going to do with the vehicle and whether she was going to transfer it into her own name. Upon having received no response, the brokerage cancelled the policy. There was nothing of concern on the Brunswick policy prior to the insurer being advised of Blanche’s death.

 

ANALYSIS AND FINDINGS

For Giamos to have status to claim statutory accident benefits from Unifund she would have to meet the definition of an “insured person”.

Section 3(1) of the Statutory Accident Benefits Schedule, as amended by Ontario Regulation 34/10, defines “insured person” as meaning :

“in respect of a particular motor vehicle liability policy,

(a) the named insured, any person specified in the policy as a driver of the insured automobile and, if the named insured is an individual, the spouse of the named insured and a dependant of the named insured or of his or her spouse”. (emphasis mine)”

 

The Standard Ontario Automobile Insurance policy (OAP 1) defines in s.1.3 “named insured” as being “the person or organization to whom the Certificate of Automobile Insurance is issued”.

Unifund disputes that the claimant Giamos would be considered an “insured person” under their policy. Specifically, Unifund takes the position that although the claimant Giamos was dependent upon her mother Andrea, the named insured on the Unifund policy was Blanche Brunswick (“Blanche”). Blanche was Andrea’s mother and the claimant Giamos’ grandmother. The named insured under the Unifund policy, Blanche Brunswick, had died some six years earlier but the policy was never changed. Throughout, the claimant’s mother Andrea was the principal and sole driver of the insured vehicle. Unifund maintains that as Andrea was only a person specified in the policy as a “driver” of the insured automobile, any dependent would not meet the definition of “insured person” under the Statutory Accident Benefits Schedule (SABS). Only a dependent of the “named insured” would be considered an “insured” under the policy.

The first argument advanced by Intact was that Andrea was a “deemed named insured” by reason of her regular use of the subject vehicle and relied on section 3(7)(f) of the Statutory Accident Benefits Schedule, O. Reg 34/10 which indicates:

(f) an individual who is living and ordinarily present in Ontario is deemed to be the named insured under the policy insuring an automobile under the policy insuring an automobile at the time of an accident, if, at the time of the accident,

(i) the insured automobile is being made available for the individual’s regular use by a corporation, unincorporated association, partnership, sole proprietorship or other entity, or

(ii) the insured automobile is being rented by the individual for a period of more than 30 days;

Intact took the position that an individual can, under certain circumstances, qualify as an “other entity” and refers to the decision of Security National Insurance Company v. Markel Insurance Company (2012) 112 O.R. (3d) 1 (OCA), where it was held that a sole proprietorship could make an insured vehicle available for an individual’s regular use by that individual’s own sole proprietorship. I find that the present fact situation is quite different and is simply one individual having regular use of another individuals vehicle. I am of the view that the term “other entity” should not be applied to someone who is clearly an “individual” in this context. Support for my position is found in the decision of State Farm Mutual Automobile Insurance Company v. Kingsway General Insurance Company (October 20, 1999) where arbitrator Samis in a similar priority dispute writes at pages 5 and 6:

“I note that throughout the Regulation that people are referred to as ‘individual’ and in other places as ‘person’. I find it difficult to conclude that sub-section 66(1) was intended to embrace individuals or persons without using either term and used instead, the term ‘other entity’. As the drafters have used different words – ‘individual’ versus ‘other entity’ –, different meanings should be given to the terms…. As a matter of ordinary parlance it would be very unusual to refer to an individual as an ‘entity’, notwithstanding broad dictionary definitions that might sanction this use….

This appears to be a case where it is appropriate to use the ejusdem generis rule or limited class rule, as an interpretative aid.  As quoted in Driedger on the Construction of Statutes, 1994, Justice LaForest defined the rule as follows:

Whatever the particular document one is construing, when one finds a clause that sets out a list of specific words followed by a general term, it will normally be appropriate to limit the general term, to the genus of the narrow enumeration that precedes it.

In my view the list contained in clause 60(1)(a) (sic) described businesses and organizations that might own automobiles. The list embraces entities which might have business purposes or other objects.  But it clearly describes entities that have some goals and structure, other than private individuals.  When this list is followed by the words ‘or other entity’ one is driven to the conclusion that the section refers to other varieties of organizations similar to those specified.”

In the alternative, Intact takes the position that Andrea was a “deemed named insured” by reason of section 239(4) of the Insurance Act, R.S.O. 1990, c.I.8, which reads:

Death of person named in owner’s policy

(4)  Where the insured named in an owner’s policy dies, the following persons shall be deemed to be the insured under the policy:

1. The spouse of the deceased insured.

2. In respect of the described automobile, a newly-acquired automobile that was acquired by the deceased insured prior to his or her death and a temporary substitute automobile, all as defined by the policy,

i. any person having proper temporary custody thereof until grant of probate or administration to the personal representative of the deceased insured,

ii. the personal representative of the deceased insured. R.S.O. 1990, c. I.8, s. 239 (4); 1999, c. 6, s. 31 (5); 2005, c. 5, s. 35 (9).

 

I find that s.239 does not apply to the present fact situation. Andrea was not the personal representative nor administrator of Blanche’s estate. Andrea’s custody of the vehicle was not “temporary”. Furthermore, probate had long since been granted. In my view s.239 was not meant to apply to a situation like the one we have here.

The final position advanced by Intact is that Unifund knew or ought to have known to have listed Andrea as the named insured. Unifund assumed coverage from Economical in 2011. They dealt only with Andrea. They did not have written consent from the named insured to deal with her daughter. The broker knew that Blanche did not drive. The broker knew that Andrea was the primary driver of the vehicle. When Andrea took out a tenants package in 2007, she was given a multi-line discount which might suggest they were treating her as the insured of the subject automobile. Certain documents sent by the broker showed Andrea as the insured. On the basis of these facts the broker knew or ought to have known that Andrea ought to have been the named insured.

Intact relies on the decision of Arbitrator Jones in Allstate v. Kingsway (October 2007), where he suggests at page 7 that an insurer who knew or ought to have been aware of facts such that they should have listed the principal driver as the named insured would be forced to deem the principal driver as the named insured. I am not satisfied on the facts before me herein that Unifund knew or ought to have known of sufficient facts where they should have listed Andrea as the named insured. Blanche was at all times the registered owner of the vehicle. Blanche was at all times the “named insured”. Although some underwriting documents show the insured as Andrea Brunswick, I could not find anywhere where the underwriting document showed Andrea as the “named insured”. Even on the documents where Andrea was referred to as the insured the document was signed by Blanche. Unifund was never advised of Blanche’s death. As far as they knew it was a simple situation where an individual owned a vehicle with someone else being the primary or exclusive driver. The broker testified that this was not an unusual situation and many policies were written in such situations. No evidence to the contrary was adduced. Given the age of Blanche, it would not be unusual to have her children advocate on her behalf. The simple fact is that the insurer was never advised that the named insured had died. From the insurers perspective, Blanche remained the registered owner of the vehicle and “named insured”. As of the date of the subject accident, I find that Blanche was the “named insured” and Andrea was the “principal or listed driver”.

Ontario courts and private arbitrators have consistently recognized and enforced the distinction to be drawn between an individual who would be considered as a “named insured” under a motor vehicle liability policy and someone who would be considered as a “listed driver”. Individuals who are described simply as a “listed driver” should not be elevated to the status of a “named insured”. The jurisprudence supporting such proposition include:

 

Collins v. Wright – decision of Rosenberg, J. dated April 19, 1988 [1988] I.L.R. 1-2319 upheld by the Ontario Court of Appeal  in a Judgment dated December 1, 1989, [1989] O.J. No. 2416,

Liberty Mutual Insurance Company v. Markel Insurance Company of Canada  – decision of Arbitrator Guy Jones released July 2006,

The Co-operators v. Lombard Insurance Company of Canada  – decision of Arbitrator Stephen M. Malach, Q. C. dated August 10, 2006,

Co-operators General Insurance Company v. Zurich Insurance Company – decision of Arbitrator M. Guy Jones dated March 16, 2007,

In a situation where, as the result of a bankruptcy, a vehicle is registered and insured in the name of another family member, the bankrupt/listed driver should not be treated as if they were the named insured absent clear evidence that the insurer or its agent “knew or ought to have known enough of the situation”, to put the listed driver down as the named insured. Jurisprudence in support of this proposition include:

 

Allstate Insurance Company v. Kingsway General Insurance Company v. CAA Insurance Company  – decision of Arbitrator M. Guy Jones dated October, 2007.

Aviva Canada Inc. v. The Motor Vehicle Accident Claims Fund – decision of Arbitrator M. Guy Jones dated May, 2009.

Although Andrea believes she told the broker that she had declared bankruptcy when placing the insurance originally in 2005, there is nothing in the underwriting file making a reference to her bankruptcy as being the reason that Blanche was the registered owner while Andrea was exclusive driver of the vehicle. I am not satisfied on the balance of probabilities that the broker was aware of the bankruptcy at that time or that Andrea may have been the beneficial owner of the vehicle. There is no evidence before that the insurer or broker were aware of facts from which they ought to have concluded that Andrea was in fact the beneficial owner of the vehicle other than the fact that their dealings were with Andrea, but which would not be uncommon where the owner of the vehicle was as elderly as Blanche. Oftentimes elderly individuals have their children advocate on their behalf, particularly where health issues are involved. At page 12 of the broker’s underwriting file, contemporaneous with the initial placement of insurance, there is reference to the fact that Andrea advised them that her mother was not doing well.

Similarly, in a previous decision of mine, Intact Insurance Company v. The Co-operators General Insurance Company dated October 17, 2014, I held that where a family member living in the same household registers and insures a vehicle in their own name in order to permit another family member to operate that vehicle as if it was their own while the latter’s driving privileges were suspended, the driver’s status will not be elevated to that of a named insured where the insurer was not made aware of the underlying arrangement.

The common thread in the cases listed above is that the result is determined by what the insurer knew of ought to have known. Unifund did not know Blanche had died. From their prospective she remained at all times the registered owner of the subject vehicle and “named insured”. There is simply an insufficient factual basis on the evidence before me for Andrea to be raised from “listed driver” to “named insured” based on what the insurer knew.

I therefore find that the claimant Giamos was the daughter of the listed driver and not the daughter of the named insured under the Unifund policy. The claimant therefore does not fall within the definition of “insured person” as set out in s.3(1) of the Statutory Accident Benefits Schedule. Priority therefore rests with the insurer of the striking vehicle, Intact.

 

ORDER

In light of my findings aforesaid, I hereby order that Intact is the priority insurer and obligated to pay statutory accident benefits to the claimant Natalie Giamos. I order that Intact indemnify Unifund for those benefits properly the subject matter of indemnification, plus interest calculated pursuant to the Courts of Justice Act and the costs of this arbitration on a partial indemnity basis. I order that Intact pay the costs of the arbitrator.

 

 

DATED at TORONTO this 17th       )

day of   April, 2015.                             )            ______________________________________
                                                                        KENNETH J. BIALKOWSKI
                                                                        Arbitrator