ONTARIO COURT (GENERAL DIVISION)

IN THE MATTER of the Insurance Act, R.S.O. 1990, chapter I-8, Section 268 as amended;

AND IN THE MATTER of Regulation 283/95, made under the Insurance Act;

AND IN THE MATTER of the Arbitration Act, 1991.

BETWEEN:

DOMINION OF CANADA GENERAL INSURANCE COMPANY Applicant - and - GENERAL ACCIDENT ASSURANCE COMPANY OF CANADA

Respondent

Counsel for the Applicant: Shawn J. O'Connor
Counsel for the Respondent: Peter J.E. Cronyn

AWARD OF THE ARBITRATORTHE HONOURABLE K.A. FLANIGAN, Q.C.

THIS MATTER came on before me on November 3, 1997, pursuant to the Judgment of Morin, J. dated the 21st day of April 1997, and to the Insurance Act, R.S.O. 1990, chapter I.8 and amendments thereto.

Counsel for the parties have agreed to the following facts without further proof thereof:

1. The Applicant hereinafter referred to as "Dominion", and the Respondent, hereinafter referred to as "General", are insurers licensed to issue policies of motor vehicle insurance in the Province of Ontario.
   
   
2. Dominion issued a policy of Motor Vehicle Insurance No. 431753703 to Eldon Holding Marks, the owner of a 1993 Tempo, who resided in the City of Kingston, in the Province of Ontario. The policy was in force at the time of the accident on February 4, 1996. At the material time, the Tempo was being driven, with the consent of the insured, by his son Kelly Marks. Kelly Marks was struck by an uninsured vehicle and was injured in the collision.
   
   
3. The insured and his son reside together and the son was not expressly named in the policy of insurance issued by Dominion, neither was he listed as an occasional driver until after the collision.
   
   
4. Kelly Marks applied for statutory accident benefits from Dominion pursuant to Section 268 of the Insurance Act. He has received benefits from Dominion in the amount of $25,267.45.
   
   
5. On March 25, 1996, Dominion served on Kelly Marks and General a Notice of Dispute Between Insurers, asserting that General be required to provide the statutory accident benefits to which Kelly Marks may be entitled.
   
   
6. General notified Dominion on May 30, 1996, that it refused to pay such benefits.
   
   
7. On March 19, 1997, Dominion served notice on General demanding arbitration of the dispute and Notice to Appoint an Arbitrator.

The issues before me as set out in the material filed, are as follows:

1. Was Kelly Marks an unnamed insured under the policy of Dominion?
   
   
2. Was Kelly marks deemed to be "named" insured in policy 8895873 issued by the Respondent General, pursuant to Section 91 of the Statutory Accident Benefits Schedule (Ontario Regulation 776/93, as amended)?
   
   
3. Who is responsible to pay the Statutory Accident Benefits to Kelly Marks?

Certain matters were not agreed to in the material filed but were not in issue at the hearing. Therefore, I find as a fact that:

1. Kelly Marks was not expressly named in the Dominion policy nor was he listed as an occasional driver.
   
   
2. Kelly Marks was not financially dependent on Eldon Marks.
   
   
3. At the time of the accident, Kelly Marks did not own a motor vehicle although he paid half of all expenses connected with the Tempo vehicle, including insurance premiums.
   
   
4. Kelly Marks resided in Ontario and was employed by Purolator Courier as a "utility courier". This is an extra driver who is on call to replace other drivers as needed. He was paid for 40 hours per week even if not required to drive the full 40 hours. He had been employed with Purolator for 10 years.

There is no dispute that Purolator supplied a vehicle for the use of Kelly Marks while he was replacing other drivers. He did not drive the same vehicle all the time because different routes required different vehicle capacity. He did not have access to these Purolator vehicles for his personal use although he may have been allowed to drive one home to lunch on a couple of occasions.

These Purolator vehicles were insured by General under its policy. There were named insureds in the policy but these did not include Kelly Marks.

Therefore, Kelly Marks was not expressly named as an insured in either the Dominion or General policies.

This fact is important because the insured is required to claim statutory accident benefits under a policy in which he or she is a "named insured" as defined in the Statutory Accident Benefits Schedule. This is set out in Section 268(4) and (5) of the Insurance Act.

Since Kelly Marks is not expressly named as an insurer under either policy, one must then look to the legislation which includes Section 91 of the Regulations to determine if he is "deemed" to be a "named insured".

The accident in question occurred on February 4, 1996. The date is important because as of January 1, 1995, there was a change in the wording of Section 91 as it relates to motor vehicle accidents after that date.

Much of the material filed in this matter dealt with these changes and several cases dealing with the law prior to January 1, 1995, were cited.

I do not propose to review the history of the pre-1995 wording of the applicable sections of the Regulations dealing with Statutory Accident Benefits Schedule or "No-Fault Benefits" as it was previously referred to. I will refer to the changes only insofar as is necessary for my decision in this case.

As is noted in State Farm Mutual Automobile Insurance Company v. Canadian Surety Insurance Company, released November 26, 1996, by arbitrator Stephen M. Malach (Tab 3 of Applicant's Response) referring to the new wording of Section 91 says Section 91(4):

"... makes it clear that the individual who qualifies under Section 91(4) is not simply to be a named insured for the purpose of the SABS. The section in clear words sets out that such an individual is to be the named insured under the policy. If that was not clear enough, the section goes on to state that the individual who qualifies under the section is to be the named insured for the purpose of payment of Statutory Accident Benefits."

Section 91(4) now reads as follows:

"Subject to subsection (7), if an insured automobile is made available for the regular use of an individual who is living and ordinarily present in Ontario by a corporation, unincorporated association, partnership, sole proprietorship or other entity, or if an insured automobile is rented for a period of more than 30 days to an individual who is living and ordinarily present in Ontario the individual shall be deemed to be the named insured under the policy insuring the automobile for the purpose of payment of the statutory accident benefits set out in this Regulation."

This case turns on the question of whether or not the insured, Purolator Courier, made an "insured" automobile available for the "regular" use of Kelly Marks?

Prior to January 1, 1994, the law with respect to Section 3(1) of the Statutory Accident Benefits Schedule was established by the case of AXA Home Insurance Company v. Western Assurance Company (1994) 21 C.C.L.I. (2d) 120, a decision of Roberts, J. of the Ontario Court (General Division).

Section 3(1) of the Statutory Accident Benefits Schedule stated that where an insured automobile is made available for the regular use of an individual the schedule applied to that individual as if the individual was a "named insured".

In Sittler v. Canadian General Insurance Co. [1993] O.I.C.D. No. 72, File Nos. A-000951 and A-004495, the arbitrator held that the wording of Section 3(1) gave the individual standing as a "named insured" for the purpose of determining which insurer was liable to pay the benefits under Section 268(2) of the Insurance Act.

In the AXA case, Roberts, J. decided the Sittler case was "incorrect in law". In the AXA case, the individual had an insured vehicle made available for his regular use and so Section 3(1) applied as if he were a "named insured". It was insured by AXA.

At the same time, the individual owned two vehicles insured by Western and under this policy he was a "named insured".

Roberts, J. concluded that he first had to determine if the individual was an "insured" under each policy. He decided that upon the facts, the individual was an insured under both policies. Therefore, Section 268 became relevant as he had recourse against both insurers. Section 268(4) must be read with reference to 268(5) to determine if the individual was a "named" insured under a contract evidenced by a motor vehicle liability policy.

In referring to the Sittler case, Roberts, J. completely rejected the arbitrator's finding that the words "as if a named insured" created a new class of insureds. He also rejected the finding that this gave these individuals the same rights as a "named insured" for the purpose of Section 268(5) of the Act to elect from which insurer to claim benefits.

Roberts, J. specifically found that the attempt to extend the definition of "named insured" in this manner was incorrect in law. Since the individual was a "named insured" under only the Western policy therefore, Section 268(5) applied and was mandatory.

I have reviewed these cases because counsel for the Respondent relied on the AXA case in his material.

However, in my view, it is no longer applicable to this situation, subsequent to January 1, 1995, because of the wording now contained in Section 91(4).

In Warwick, et al v. Gore Mutual Insurance Company, et al. (1997) 143 D.L.R. (4th) 110, the Ontario Court of Appeal upheld a decision of Morin, J. and found that the intention of the legislature was that the definition in the Schedule, not that in Section 224 of the Act, should govern entitlement to No-Fault benefits.

Mr. Justice Morin in his reasons, which were adopted by the Court of Appeal, stated:

"In my view in determining matters of conflict between two or more insurers it is incumbent upon the court to consider not only the provisions of the Act but rather the entire scheme of automobile insurance legislation."

I return now to the issue before me and it narrows down, in my view, to this:

Was an insured automobile made available to Kelly Marks for is regular use as contemplated in section 91(4) of the Regulations?

Counsel for the Respondent takes the position that no insured automobile was made available to Kelly Marks on a regular basis. He points to the restrictions placed upon Kelly Marks regarding such vehicles to support that position. The evidence, as stated above, clearly indicates that he has the use of such vehicle only while at work; that he may not use it for personal use, notwithstanding he may have been permitted to use a vehicle to go home for lunch on a "couple" of occasions, and that he had to turn in the keys to such vehicle at the end of each shift.

Counsel for the Applicant agrees that there is no definition in the Act or Regulations as to what constitutes "regular" use. He cites the Sittler case where the arbitrator did make reference to "regular use" and counsel argues that this was never rejected on appeal or in any other case where Sittler was referred to.

Both counsel suggest that one must use a "common sense" approach in defining "regular use" on any given set of facts in a particular case.

Counsel for the Respondent urges upon me the position that the "company car" form of regular use is what the section is meant to cover.

This restricted definition of "regular use" was urged upon the arbitrator in the Sittler case.

On the second page of her reasons in the report of the Sittler case at Tab 5 of the Respondent's material, she states as follows:

"Nothing in subsection 3(1) restricts the "regular use" branch to the company car situation, and I do not accept that it is restricted in that way. Mrs. Sittler drove Mr. Johnson's cab for 12 hours a day, six days a week, for the purpose of earning her living. That is "regular use" by any definition. There is no question the cab was "made available" to her by Mr. Johnson and that Mrs. Sittler is an "individual".

The arbitrator went on to find that the cab was made available for Mrs. Sittler's "regular use".

As I have said earlier, this part of her decision was not attached in the AXA case. In my Judgment, it was and is a sound approach. In following Morin, J. and looking at the entire scheme of the legislation, it is clear that the intent of the legislature is to give the widest possible coverage in the case of injured persons. The legislators have had ample time and opportunity to define a restricted use for the term "regular use" and has chosen not to.

In this case, an insured automobile was made available to Kelly Marks for the purpose of Purolator Courier carrying out its business purpose and for Kelly Marks to earn his living as their instrument of doing so. Clearly, in my view, the vehicle made available to Kelly Marks as required to carry out his employment falls within the confines of Section 91(4) of the Schedule.

Counsel for the Respondent takes the position that if I find the individual Kelly Marks to be a "named insured" under Section 91(4) then he is subject to the terms of the General policy just as any other "named insured" under the same policy.

He refers me to Tab A of the Respondent's Statement which is the General policy #8895873 issued to Purolator Courier Limited et al. and, in particular, Special Endorsements OPCF 2 and S.E.F. 2, both of which deal coverage when a "named insured" drives another automobile. Both of these endorsements exclude driving other vehicles which are owned or frequently used by the named insured.

The evidence in this case is that Kelly Marks did not drive his father's vehicle a great deal but it was available to him at any time without his father's permission. In other words, he used it as he needed it.

For the purpose of this case, I am prepared to assume that this constitutes "frequent" use within the provisions of the Special Endorsements. I do not think this is sufficient to deprive the individual, Kelly Marks, of his right to recovery from General.

I refer to Section 268(1) of the Act which states:

"Every contract evidenced by a motor vehicle liability policy, including every such contract in force when the Statutory Accident Benefits Schedule is made or amended, shall be deemed to provide for the statutory accident benefits set out in the Schedule and any amendments to the Schedule, subject to the terms, conditions, provision, exclusions and limits set out in that Schedule."

The Schedule lists the persons insured under a particular contract of automobile insurance and thus entitled to receive No-Fault benefits. In my view, in light of the Warwick decision, the Schedule must supersede any clause in the Contract of Insurance with respect to the payment of benefits. Therefore, I find that Special Endorsements OPCF 2 and S.E.F. 2 do not assist General in respect to its liability to pay under the Statutory Accident Benefits Schedule.

I therefore answer the questions posed by the parties in their material filed.

1. Q. Was Kelly Marks an "insured" under the Policy of Insurance issued by Dominion of Canada General Insurance Company, the Applicant herein?
   
   A. Yes.
   
   
2. Q. Was Kelly Marks deemed to be a "named insured" under the policy issued by General Accident Assurance Company of Canada pursuant to Section 91 of the Statutory Accident Benefits Schedule at Ontario Regulation 776/93, as amended?
   
   A. Yes.
   
   
3. Q. If the answer to question 2 is "Yes", does that designation apply to the priorities set out in Section 265(5) of the Act?
   
   A. Yes.

As a result of these answers, I find Kelly Marks is a named insured under General Accident policy #8895873 and therefore, General Accident Assurance Company of Canada is responsible to pay the statutory accident benefits to Kelly Marks arising out of the motor vehicle collision of February 4, 1996.

There will be a further order that General Accident Assurance Company of Canada reimburse the Applicant, Dominion of Canada General Insurance Company, for the cost of the benefits already paid to Kelly Marks arising out of the said motor vehicle collision together with interest thereon pursuant to the Courts of Justice Act from the date of payment thereof.

And it is further ordered that the Respondent, General Accident Assurance Company of Canada shall pay to the Applicant, Dominion of Canada General Insurance Company, its costs of this arbitration.


OTTAWA
Dated: November 12, 1997