IN THE MATTER OF AN ARBITRATION

BETWEEN

ALLSTATE INSURANCE COMPANY OF CANADA
(ALLSTATE) Applicant -and- OLD REPUBLIC INSURANCE COMPANY (OLD REPUBLIC) Respondent

David Cheifetz, Esq.,
Counsel for the Applicant
Allstate Insurance Company

D.H. Rogers, Esq., Q.C., and
Paul Godin, Esq.
Counsel for the Respondent
Old Republic

Date Heard:
MAY 1, 1997

AWARD

The parties have agreed that I should arbitrate the issues between them. The principal issue, briefly stated, is: does the loss transfer regime for accident benefits established by the Insurance Act, R.S.O. 1990, c.1.8, section 275 (the Act) and the applicable Regulations thereto apply to single vehicle accidents?

THE FACTS

The facts have been agreed upon. On October 30th, 1994, Gilbert St-Pierre was a passenger in a commercial vehicle, when that vehicle was involved in a single vehicle accident, resulting in the death of Mr. St.-Pierre. The respondent Old Republic was insurer of the commercial vehicle, which was a "heavy commercial vehicle" within the definition of s.9(l) of Regulation 664 of the InsU7-a7lce Act.

The Applicant, Allstate, was the insurer of Mr. St.-Pierre, the named insured under a standard automobile policy insuring a private passenger automobile. Allstate paid certain death and funeral benefits to St.-Pierre's family, under Part III of the Statutory Accident Benefits schedule, pursuant to section 268(2) of the Act as follows:

Death benefit S 100,927.00
Dependent benefit 10,000.00
Funeral expenses 6,000.00
Total S 116,927.00

Allstate as first party insurer claims indemnity from the second party insurer, Old Republic, pursuant to section 275(l) of the Act. That gives rise to the first issue earlier mentioned, namely whether the right to indemnity for the payment of statutory accident benefits may be claimed by a first party insurer under the legislative scheme where the commercial vehicle insured by the second party insurer, was involved in a single motor vehicle accident.

THE LEGISLATIVE SCHEME

Section 275 of the Act provides that the first party insurer is entitled to be indemnified by the second party insurer as follows:

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 regulation 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. 1990, c. I.8, s. 275 (1); 1993, C. 10, S. 1.
   
   
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.8, s. 275 (2). (emphasis mine).

Section 275 (2) above provides that the degrees of fault of each insurer's insured is to be determined under the Fault Determination Rules. Section 9 of Regulation 664 to the Act, as amended, sets out the circumstances in which indemnification pursuant to s.275 of the Act is available as follows:

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;...
   "Second party insurer" means an insurer required under
   section 275 of the Act to indemnify the first party insurer.
   
   
3. A second party insurer under a policy insuring a heavy commercial vehicle is obligated under section 275 of the Act to indemnify a first party insurer unless the person receiving 'dent benefits from the first party insurer is statutory accident benefits from the first party insurer is
   claiming them under a policy insuring a heavy commercial vehicle.

Regulation 668 sets out the Fault Determination Rules in sections 2-5 as follows:

1. An insurer shall determine the degree of fault of its insured for loss or damage arising directly or indirectly from the use or operation of an automobile in accordance with these rules.
   
   
2. The diagrams in this Regulation are merely illustrative of the situations described in these rules.
   
   
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.
   
   
4. (I) If more than one rule applies with respect to the insured, the rule that attributes the least degree of fault to the insured shall be deemed to be the only rule that applies in the circumstances.
   
   (2) Despite subsection (1), if two rules apply with respect to an incident involving two automobiles and if under one rule the insured is I 00 percent at fault and under the other the insured is not at fault for the incident, the insured shall be deemed to be 50 percent at fault for the incident.
   
   
5. (I) 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.
   
   (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.

Regulation 668 then goes on to fix fault in accordance with certain schematic diagrams always involving two motor vehicles and a description of the manner in which the two motor vehicles were involved in the collision.

THE POSITION OF THE PARTIES

The position of Allstate is that there is nothing in the language of section 275 of the Act or the applicable Regulations that expressly or by implication restricts the right of the first party insurer to loss transfer indemnity, in multiple vehicle accidents only, that is accidents involving a heavy commercial vehicle and one or more motor vehicles.

Indeed Mr. Cheifetz, on behalf of Allstate, submits that to give the legislation such a narrow interpretation would result in an exception that would have the effect of denying the first party insurer the right to indemnity where its insured was a pedestrian or bicyclist and was struck or injured by a heavy commercial vehicle.

Old Republic takes the position that the language of the legislation and Regulations relating to loss transfer is unclear and at least ambiguous in defining who is obliged to make loss transfer payments. Mr. Rogers, on behalf of Old Republic, submitted that when one looks at the Kruger Commission Report, bulletins put out by the Ontario Insurance Commission and the interpretation by the Courts of United States legislation of similar nature, it is apparent that the loss transfer provisions were intended by the legislature to ensure a fair allocation of the costs of no-fault benefits to the insurers of heavy commercial vehicles under circumstances where more than one vehicle was involved.

The reason suggested for allocating the cost to the insurers of the heavy commercial vehicle is that generally occupants of cars in car-truck collisions suffer injuries more severe than those sustained by occupants of trucks in single truck collisions. In the light of the purpose of the legislation, Mr. Rogers submits that the loss transfer should only occur where the heavy commercial vehicle is involved in a collision with at least one or more passenger vehicles in which the injured claimant was an occupant.

COMMENTARY

The scheme of no-fault benefits in force at the material time provide for payment of benefits to the named insured under a standard automobile policy, his or her spouse, their dependents, if injured in a motor vehicle accident in Ontario, while occupant of a motor vehicle, or as non-occupants, i.e. as pedestrians or bicyclists. The claimant in each of these situations, whether a passenger, a pedestrian or a bicyclist, is required under section 682(2) of the Act to look to his or her own insurer for payment of no-fault benefits. Hence in this case the members of St.-Pierre's family were required and did make claim for death and funeral benefits to Allstate, as the first party insurer.

There is no right of subrogations for accident benefits, but in June of 1990, the Legislature brought into force the scheme of loss transfer described in section 275 of the Act. Under this scheme, the insurer obliged to pay accident benefits (the first party insurer) is entitled to be indemnified from the insurers of certain classes of automobile named in the Regulations, and involved in the accident in question. Where a heavy commercial vehicle is involved, the insurer of that vehicle (the second party insurer) is required under the terms of section 9 of Regulation 664, set out above, to indemnify the first party insurer with respect to the benefits paid, unless the vehicle insured by the first party insurer was also a heavy commercial vehicle. The indemnification by the second party insurer is to be made in accordance with the "respective degrees of fault of each insurers' insured" under the Fault Determination Rules (section 275(2)).

In short, the scheme of loss transfer shifts the costs of no-fault benefits from the insurers of non commercial automobiles to insurers of heavy commercial vehicles according to the fault attributable to the operator of the commercial vehicle, under the Fault Determination Rules, set out in Regulation 668(2).

1 agree with the submission of counsel for Allstate that there is nothing in the language of the legislation or the Regulations to suggest that the right of the first party insurer is limited to claims involving multiple vehicle accidents. Section 275(2) of the Act refers to the fault of each insured without reference to the number of vehicles involved. Although the various schematic drawings in Regulation 668, the Fault Determination Rules, show accidents involving two or more vehicles, section 2(2) of the Regulations specifically provides that the diagrams "are merely illustrative of the situations described in these Rules." Further, section 5(l) provides "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."
As Mr. Cheifetz pointed out in the course of argument, if the position taken by Old Republic is correct that the right of loss transfer only exists where there are two or more vehicles involved, then the first party insurer of a pedestrian or bicyclist struck by a heavy commercial vehicle would have no recourse for indemnity from the second party insurer of that commercial vehicle.

There is nothing in the legislation to suggest directly or by inference that an exception should be made in the case of pedestrian claims and indeed such an exception would defeat the clearly expressed intention of section 275 of the Act.
In my view, the language of section 275 is clear and unambiguous in providing for indemnity by the second party insurer according to the respective degrees of fault of each insured involved in the accident . In the case of injury to a pedestrian, a bicyclist or where the occupant claimant was a passenger in a single commercial vehicle, then under the Fault Determination Rules liability should be determined according to common law principles.

There are no cases directly on point. In Re Jevco Insurance Company and York Fire & Casualty Company (I 996), 27 O.R.(3 d) 483 the Ontario Court of Appeal dealt with a claimant injured while a passenger in a van involved in a single vehicle accident. The first party insurer of a motorcycle paid no fault benefits to the injured claimant and sought indemnity from the insurers of the van who raised as a defence that the claimant was not wearing a seatbelt. The Court of Appeal held that the phrase "fault of its insured for loss or damage" in section 2(l) of the Fault Determination Rules, apply to the degree of responsibility for the accident itself, That is, the manner in which the accident occurred and the failure to wear the seatbelt was irrelevant.
In Jevco, the issue of the availability of the loss transfer regime to a single motor vehicle accident was not raised. The Court did, however, stress that it is the conduct of the insured as it relates to the cause of the accident which alone is relevant in determining fault.

In my view, the clear wording of the legislation contemplates the involvement of two insures in determining the degree of fault for the purpose of the loss transfer, not necessarily two or more motor,%,vehicles. The insured as a passenger in a single motor vehicle accident could be at fault for the accident through conduct that interfered with the driver's operation of that motor vehicle, if for example, the passenger without justification grabbed and turned the steering wheel, causing the vehicle to go out of control.

Mr. Rogers, in his very able argument on behalf of Old Republic, submitted that reference should be had to the 1989 report of the Kruger Commission which outlined the policy basis for the transfer scheme and to the Ontario Insurance Commission bulletins purporting to outline the conditions under which the loss transfer scheme should operate, and finally to U.S. legislation and the decisions involved in interpreting such legislation.

I do not find reference to the U.S. legislation or decisions to be of assistance because it is obvious that such legislation is cast in different ten-ns.

THE KRUGER COMMISSION REPORT

The Kruger Commission Report as delivered to the Lieutenant Governor in Council in 1989 is undoubtedly useful in describing the major concern of the Legislature in enacting the loss transfer legislation. The report stated that:

9.9 With respect to commercial vehicles, the major concern is that heavy commercial vehicles are "loss causers". Trucks, being bigger and heavier, cause a lot of damage to small vehicles and their occupants and the occupants of a truck are not likely to be seriously injured. In that the truck insurer, under a threshold no fault system, would not be responsible for some portion of the damage caused by its insured, there would be less incentive for trucking companies to continue with safety programs, premiums for truck insurance would decrease, and private passenger automobiles would be subsidizing the damage caused by the trucks.

9.10 The shift of the burden from large trucks to small vehicles creates an apparent inequity which has been addressed by Jurisdictions in different ways. The most extreme measure is to exclude large

commercial vehicles from the no fault system. Alternatively, there was testimony that some U.S. jurisdictions require the insurer for the large commercial vehicle to pay the no fault benefits in an accident with a private passenger automobile "on an absolute liability basis" (Perry, Transcript, at p. 505 1). In Hawaii, there is provision for a loss transfer on an absolute liability basis for vehicles over I 0,000 pounds (Submissions of State Farm, at 4; Brown, Transcript at 7361). In New York there is a right of subrogations where the accident involves a taxi or truck (Reierson, Transcript, at 666-67).

Kruger Commission, An Examination of Threshold No Fault and Choice No Fault Systems of Privately Delivered Automobile Insurance, Report to the Lieutenant Governor in Council, 1989 (the "Kruger Report")

Although the language of the legislation dealing with loss transfer payments does not specifically address the major concern described above to shift the burden from small vehicles to large commercial trucks, it is clear from the language in s.275 of the Act that the purpose of the legislation is to balance the cost of no fault benefits between different classes of vehicles and under certain circumstances to transfer those costs to the heavy commercial vehicles.

If there was some ambiguity in the legislation, I might properly refer to the Commission report to resolve the ambiguity in light of the purpose of the legislation.; but as I have already indicated, I find the language of section 275 clear and unambiguous and giving that section a reasonable construction does not require proof of multiple vehicle involvement before the transfer provisions should be invoked. I recognise that in the great majority of cases there will be at least two or more vehicles, including the heavy commercial vehicle, but the legislation does not make a multiple vehicles involvement a condition precedent to the right of indemnity.
Mr. Rogers also cited the bulletins issued by the Ontario Insurance Commission, as having compelling weight in determining the purpose and procedure under the loss transfer provision. In particular, the most recent Transfer Loss Bulletin (number 11/94) under the heading: "When does loss transfer apply?" states (at 3):

C. Heavy Commercial Vehicles

The accident must involve a heavy commercial vehicle and another class of vehicle.

The person injured in the other vehicle must not be claiming accident benefits under a policy insuring a heavy commercial vehicle. (emphasis added).

There is no question that a bulletin issued by the Ontario Insurance Commission should be received as strong persuasive authority but it is, of course, not binding in all situations. In my view, the Commission in the above statement, is referring to what is undoubtedly the most common situation where a heavy commercial vehicle and at least one other vehicle of a different class is involved. The Commission makes no reference to
what would be a less common situation: that is where a pedestrian or bicyclist is struck by a heavy commercial vehicle. I cannot accept that the Commissioner intended to convey the impression that in such a situation, the first party insurer of the pedestrian or bicyclist would not be entitled to assert a loss transfer claim.

I conclude that the enabling legislation does not expressly or by implication limit the loss transfer to accidents involving heavy commercial vehicles and other motor vehicles.

THE ISSUE OF INTEREST

Allstate claims interest on the accident benefits paid to its insured from February 13th 1996. Old Republic takes the position that because of the novelty of the issue and uncertainty of the law, interest should not run until Old Republic at least had a reasonable time to assess the merits of the claim. Further, because a loss transfer claim on the facts of this case runs so patently counter to the policy reasons behind the loss transfer provision, then at best interest should only run from the date of this decision.

It is settled law that a consensual arbitrator has the same power as the courts, to award interest, in the exercise of a discretion.

I have already expressed the view that whatever the policy of the legislature, the wording of the legislation itself was clear and unambiguous in providing for a night of indemnity in the circumstances of this case. Even though there was no authoritative precedent on the issue raised in this decision, I see no reason why the usual rules should not apply in the award of damages. Those rules require courts to award interest on damage awards unless there are compelling reasons why such an award would be unjust. In the circumstances of this case, it is my view that interest should be paid.

CONCLUSION

Old Republic is directed to pay to Allstate the sum of $116,927.00 less $2,000.00 deducted pursuant to section 275(3) of the Act. Allstate shall have interest on the net amount payable at 5% per annum calculated from the date of demand, February 13th 1996.

Pursuant to the agreement of the parties, Old Republic will pay the costs of the arbitration and will indemnify Allstate with respect to any Arbitrator's fees, but each party wi 'II be responsible for its own solicitors' costs.

Dated at TORONTO frist day of MAY, 1997.

THE HON. W. DAVID GRIFFITHS, Q.C.

ARBITRATION

AWARD

Applicant Jevco insurance Company
Counsel - Mr. Brucker

Respondent Royal Insurance Company
Counsel Mr. G. Mew

REASONS:

On September 4th, 1991, Justice Coo ordered that the parties submit to application pursuant to the 'Arbitrations Act, R.S.O. 1980, c. 25 with respect to certain matters arising under the Insurance Statute Law Amendment Act, 1990, Section 239(b) and Regulation 275/90, Section 9.

The application was heard on July 22.nd, 1992. By that time the parties had resolved all of the issues which lead -to the initial request for arbitration, except for the issue of interest and costs- During the application counsel referred to the Ontario Regulation 273/90 under the Insurance, Act, Coombe v. Constitution Insurance Companv, 29 O-R. (2d) 729 C.A- , Hope and Cooperator's Insurance Association et al, 53 O-P,(2d) 208, Divisional Court, Stravolis Holdings Ltd. v. Harry Zaremis, Unreported Decision of Ontario Divisional Court, August 31, 1987,- Arbitrations Act, S.O. 1991, c. 17, Re Ketcheson and Canadian Northern Ontario Rwy. Co., (1913), 19 O.L.R. 339 (C-A.), Newport Borough Council v. Monmouthshire County Council, 1947 I All E. R. 900 (H.L.), Mr. Greenjeans Corp.. v. Lombodel Investments Ltd., unreported, 23 April 1985, Divisional Court, C. Brown & J. Menezes Insurance Law in Canada (Toronto: Carswell, 1982), P. 322, A. Walton & M. Vitoria, Russell on th e Law of Arbitration, 20th ed. (London: Stevens & Sons, 1982) pp. 324-325, Re Town of Drvden and Drvden Police Association (1973), O.R. 619 (Ont. H C.), Bell v. Ontario Human Rights Commission, [1971] S.C.R., 756.

The relevant section of the insurance Statute Amendment Act, Section 239 (b) provides as follows:

1. The insurer responsible under subsection 232(2) for the payment of no-fault 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 regulation involved in the incident from which the responsibility to pay the no-fault benefits arose.
   
   
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.
   
   
3. "No indemnity is available under subsection(2) in respect of the first $2,000.00 of no-fault benefits paid in respect of a person described in that subsection.
   
   
4. "if the insurers are unable to. agree with ,respect to indemnification under this section, the dispute shall be resolved through arbitration under the Arbitrations Act.
   
   
5. "No arbitration hearing shall be held with respect to indemnification under this section if there is an unsettled claim against any of the insurers by an insured in respect of the incident for which indemnification is sought."

Ontario Regulation 275/90, Section 9 provides as follows:

9.(I) In this section, "first party insurer" means the insurer responsible under subsection 232 (2) of the Act for the payment of no-fault benefits; "heavy commercial vehicle" means a vehicle with a gross vehicle weight greater than 4,500 kilograms that is used primarily to transport materials, goods, tools or equipment; "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; "second party insurer" means an insurer required under section 239b of the Act to indemnify -the first party insurer.

(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 239b of he Act to indemnify a first party insurer,

1. if the person receiving no-fault 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 no-fault benefits arises, or
   
   (ii) if motorcycles and motorized snow vehicles are the only types of vehicle insured under the policy; or
   
   
2. if the person receiving no-fault 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 no-fault benefits arises; or
   
   (ii) if motorcycles and motorized snow vehicles are the only types. of vehicle insurance under the policy.

The applicant submits that although Section 239 (b) does not specifically refer to the payment of interest -there is nevertheless a "broad policy in the courts to allow it". The applicant argues that failure to include interest in such an award would lengthen the : process and would be impractical.

The applicant further invites me to recognize that a clear message should be sent to the insurance industry to meet their obligations promptly. The applicant is Particularly concerned in that the accident benefit payments in the circumstances of this case are ongoing and may continue for a substantial period of time. Failure to pay interest would prejudice the insurer that is required to make the accident benefit payments to the injured party in the event that interest is not awarded.

The Respondent's position is simply that Section 239 (b) is statutory and as no provision is made for interest, none can be awarded.

Both counsel are unable to find any cases directly on point.
Section 239(b) provides that the insurer responsible for paying the injured person no-fault benefits, otherwise known as accident benefits, is to be "indemnified in relation to such benefits paid by it from -the insurers of such class or classes of automobiles as may be named in regulation involved in the accident from which the responsibility to pay the no-fault benefits arose". The Respondents are insurers in the class of cases contemplated by this section.

The issue involves the determination of the Intent of -the legislature when it used the word "indemnification".
Webster's New Collegiate Dictionary defines indemnification; as "The action of indemnifying" referring to "indemnity".

Indemnity is defined as "secure against harm, loss, or damage"; "to make compensation for the incurred hurt, loss or damage"; "exemption from incurred penalties, or liabilities".

As basic rule of construction is that words in a statute must be read in their ordinary sense, in accordance with accepted rules of composition and grammars unless the statute otherwise directs. See Victoria (City Bishop of Vancouver Island [19211 2 A-C. 384 (P-C-) at p. 387.

It is my opinion that the use of the word "indemnification" in its ordinary context and in the context of section 239 (b) requires the insurer to be fully paid for any amounts paid by it to the injured party. My understanding is further supported by the statutory -use of the words "in relation to such benefits paid by it". Those words following the word indemnification indicates that the intention of the legislators was not to restrict the "indemnification" to the exact amount of the benefits paid, but rather to indemnify with respect to not only the benefits paid but anything in relation to those "benefits".

Further the legislator in section 239 (b)(4) specifically provided for arbitration of any issue with respect to "indemnification".
The applicable Arbitrations Act to this proceeding is the Arbitration Act R.S.O. 1980, c. 25.

Section 13 of that Act contemplates enforcement of the arbitrators award in the same manner as a Judgment or Order.
Justice Reid in Re: Hope and Cooperators Insurance Association et al 53 O.R. (2d) 208 relying on Callaghan J. at 218 and 219 held that the authorities were to the effect that a consensual arbitrator had the same power as our courts with respect to the issue of interest. Referring to Callaghan J. stating:
"an arbitrator may award interest by virtue of his mplied authority to follow the ordinary rules of law. The cases cited in support of that proposition indicate that it is quite proper for an arbitrator in disposing of interest on an award, by parity of reasoning, to adopt the position and approach of a court would follow in a similar situation."...." I am satisfied that he (the arbitrator) exercised his discretion properly, and followed a course that a civil court would follow in dealing with the matter of interest on such an award. In so doing he was properly applying his discretion."

The proposition in law is, in my opinion, not in doubt. It is this. Where parties refer a dispute between them to arbitration in England, they impliedly agree that the arbitration is to be conducted in accordance in all respects with the Law of England, unless, which seldom occurs, the agreement of reference provides otherwise."

Reid J. went on to say that he "could not see anything in the collateral contract that suggests an intention of the parties to exclude the courts". See p. 119.

Mr. Justice Steele in the Divisional Court in his Reasons dated August 31, 1987, in Stravolis Holdings Limited V. Harry Zaremis (unreported) held that the test with respect to the arbitrators jurisdiction to award interest is that set out in Re: Hope and Cooperators Insurance referred to above.

The Respondent argues that Re: Hope and Stravolis are distinguishable in that those cases deal with the arbitration of agreements wherein the parties, by the terms of those agreements invite arbitration as opposed to arbitration imposed by a statute.

On the contrary the Hope case supports the applicants contention in that subparagraph (4) of paragraph 239 (b) of the ' Insurance Statute Law Amendment Act specifically requires the issue of indemnification to be determined under the Arbitration Act.

Further I see no logical reason as to why an arbitrator should distinguish between cases which require consentual arbitration as opposed to arbitration imposed by statute.

The Hope case refers to. Billes v Parkin Partnership Architects Planners, 31 C.P.C. 198 which held that an arbitrators award should bear interest from its date as if it were a Judgement. This further supports the fact that an arbitrator ought to determine the issue of interest.

From the evidence provided the applicant first demanded indemnification in the amount of $14,045.44 on January 24, 1991. The Respondent replied on March 12, 1991, indicating that it preferred to make one indemnification payment once all benefits were paid. On March 15th the Applicant advised the Respondent that some $18,910.65 had been paid requesting indemnification payment, that is an additional $4,865.21, having been paid since the original January 24th request.

On June 21, 1991 the Applicant advised that $27,310-65 had been paid to date. The Respondent subsequently paid 'the $27,310.65 by cheqe dated July 22, 1991. Consequently, all payments requested by the applicant had been paid prior to Judge Coo's Order dated September 4, 1991, which granted arbitration.

I find that Re: Ketcheson and Canadian Northern Ontario Rwy. Co, (1913) 19, O.L.R. 3 3 9 (C.A.), Newport Borough Council v. Monmouthshire County Council,[ 1947] 1 All E-R. 900, (H.L.) l Mr. Greenjeans Corp. v. Lombodel Investments Ltd., unreported, 23 April 1985, Divisional Court, Re Town of Dryden and Dryden Police Association (1973), O-R. 619 (Ont. H-C.) Bell v. Ontario Human Rights Commission, [1971] S.C.R. 756 are distinguishable from the circumstances of this case in that Section 239 (b) of the Insurance Statute Law Amendment Act allows the arbitrator to award interest.

It is my opinion that interest begins to run in relation to Section 239 (b) from the time that it is requested. The initial request was made January 24, 1991 with respect to $14,045.44, which amount was not paid until July 22, 1991.

On March 15th, 1991 the Applicant notified the Respondent an additional $4,865-21 had been paid. This amount was not paid until July 22, 1991.

Notice was given on June 21, 1991 by the Applicant of an additional $8,400.00 which was not paid until July 22, 19 91. The Respondents did not pay that amount until July 22, 1991.
The parties have agreed that the rate of interest ought to be established at 12.3%.

I find that the applicant is therefore entitled to interest at the rate of 12.3% per annum, for the period of time from which notice was given by the applicant until payment was actually made with respect to each payment made by the applicant.
Section 27 of the Arbitration Act authorizes me to award costs.
Because this case was unique in that the parties had essentially agreed to everything except interest prior to arbitration and under the circumstances I award no costs.

H.B. CAMPBELL, Q.C.