IN THE MATTER OF THE ARBITRATION

BETWEEN:

AMERICAN HOME ASSURANCE COMPANY Plaintiff - and -
AXA INSURANCE (CANADA) COMPANY Defendant

Heard on: December 4th, 1997

Counsel:

S. Wayne Morris, Esq.
Solicitor for American Home Assurance Company

Kevin L. Ross, Esq.
Solicitor for AXA Insurance (Canada) Company

AWARD

BACKGROUND:

The background facts in this matter can be stated as follows:

The Defendant, AXA Insurance (Canada) Company, hereinafter referred to as "AXA",

had issued a standard automobile policy for the policy period in question, on a 1983 Chrysler New Yorker, with the applicant/insured identified as Carol Ann Hasilo.

The said Ms. Hasilo was an employee of Crawford & Company. As part of her employment, she was given access to a 1993 Ford Tempo, which was leased by her employer, and which was covered by a policy issued by the Plaintiff, American Home Assurance Company, hereinafter referred to as "American Home". The American Home policy identified Crawford & Company as the applicant/insured.

On October 26th, 1994, while operating the vehicle insured by American Home, Ms. Hasilo was injured in a motor vehicle accident. The relevant insurance legislation in effect as of October 26th, 1994, is known as Bill 164.

As a result of her injuries and disability arising out of the motor vehicle accident, Ms. Hasilo submitted an application to American Home, dated October 3 1 st, 1994, requesting payment of accident benefits.

American Home obviously accepted the application and commenced malting accident benefit payments, which have continued up to the present time.

In the month of July 1996, some 21 months after the accident in question, American Home wrote to AXA, suggesting that AXA should have been paying the accident benefits from the beginning. American Home is therefore looking to AXA for indemnity for the accident benefits paid to date, and they also wish AXA to assume the liability for any future accident benefits related to the motor vehicle accident, to which Ms. Hasilo may be entitled.

THE ISSUES:

AXA concedes, as it should, that Ms. Hasilo was a "named insured" under the AXA insurance policy. AXA argues that, by reason of Section 91 of the Statutory Accident Benefit Schedule ("SABS"), Ms. Hasilo was also a "named insured" under the American Home policy. If AXA succeeds in that position, then they argue that one would look to the priority of payment by insurers as set forth in Section 268 of The Insurance Act, and in particular Section 268(5.2).

Simply put, AXA says that if it is established that Ms. Hasilo was a "named insured" under the American Home policy, then, since Ms. Hasilo was an occupant of the vehicle insured by American Home at the time of the accident, the American Home policy would be primary. American Home would then be obliged to make the accident benefits payments, which they have already made, from October 26th, 1994, up to the present time, and American Home would have the continuing obligation.

As a secondary issue, if I find that Ms. Hasilo was not a "named insured" under the American Home policy, for the purpose of determining priority insurance coverage, and if, accordingly, I find that AXA was the primary insurer, AXA then argues that American Home is barred from pursuing any indemnity from AXA by reason of the expiration of the 90 day limitation period contained in Ontario Regulation 283/95, Section 3.

FINDINGS:

I shall now proceed to deal with the first issue, that being whether Ms. Hasilo was a "named insured" under the American Home policy, for the purpose of determining priority coverage under Section 268 of The Insurance Act.

Counsel for American Home takes some considerable comfort in the reported decision of AXA Home Insurance Co, vs Western Assurance Co., a decision of Mr. Justice Roberts, cited as (1 994) 0. J. No. 28 1, and the decision of AXA Insurance vs Markel Insurance Co. of Canada, a decision of Mr. Justice Day, cited as (1997) O.J. No. 2186. Both decisions deal with fact situations which are almost identical to the facts in issue in this matter.

Counsel for AXA argues that the reasoning adopted by the two Judges of the Ontario Court (General Division) in the two above-noted cases has been specifically rejected by the Ontario Court of Appeal in the decisions of Gore Mutual vs Co-operators, 32 O.R. (3d) at p.76, and Warwick et al. vs Gore Mutual Insurance Company et al., at page 88 of the same volume. I was urged to read those Court of Appeal decisions, adopt the reasoning and language of Mr. Justice Laskin, and conclude that, for the purpose of determining priority coverage between the two insurers in this present matter, I should be both allowed and required to utilize the deeming provisions of Section 91 of The SABS in determining whether Ms. Hasilo was a named insured under the American Home policy, for the purpose of priority coverage under Section 268 of The Insurance Act.

My decision with respect t6 the "named insured" issue is to find in favour of the position taken by American Home. I reach this conclusion for the following reasons:

1. The foundation of the position taken by AXA is the wording of Section 91 (I) of The SABS. However, the concluding words of that subsection are critical and read as follows:
   
   "...the individual shall be deemed for the purpose of this regulation to be the named insured." (Emphasis added).
   
   In my view, the words "for the purpose of this regulation make it clear that the deeming words of Section 91(l) are to be used only with respect to Ontario Regulation 776/93, and that such deeming provisions are not intended to be carried over and applied to the priority coverage provisions of The Insurance Act, and in particular Section 268.
   
   
2. My view is further supported by the wording used by the Legislature in Section 268(5) of The Insurance Act. Those words are as follows:
   
   (5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is the spouse or a dependent, as defined in the Statutory Accident Benefits Schedule, of a named insured, the person shall claim statutory accident benefits against the insurer under that policy.
   
   By virtue of the wording of that subsection, the Legislature has specifically incorporated into that subsection the definition of the words "spouse" and "dependent", as defined in The SABS. Surely, if it was the intention of the Legislature to incorporate the deeming definition of "named insured" under The SABS, into Section 268, the Legislature would have specifically done so within the wording of Section 268(5).
   
   
3. I do not see that my determination of this issue is In any way in conflict with the words and reasoning of Mr. Justice Laskin in the two
   
   Court of Appeal decisions to which I was referred In my view, even if I read the provisions of The Insurance Act and The SABS in
   
   their totality, as urged by counsel for AXA, I reach the same conclusion as I have specified in paragraphs I and 2, above.

In the end result, I find that, for the purposes of priority coverage under Section 268 of The Insurance Act, Ms. Hasilo was not a "named insured" under the American Home policy. I must now turn to the second position taken by AXA. They argue that, pursuant to the provisions of Section 3 of Ontario Regulation 283/95, it is not open to American Home to now seek indemnity from AXA, because American Home failed to give written notice to AXA within 90 days of the receipt of a completed application for benefits from Ms. Hasilo, requiring AXA to make the required payments.

It is common ground that at the time of the particular motor vehicle accident and submission of the application for benefits, Ontario Regulation 283/95 had not been enacted. For that reason, AXA argues that, at the very least, there should have been some form of written notice to AXA from American Home, regarding any priority dispute, and that such written notice should have certainly been no later than 90 days following the enactment of Regulation 283/95. Again, it is common ground that the Regulation was in fact enacted as of May 27th, 1995. AXA therefore submits that, at the very least, they should have received some written notice from American Home by the latter part of August 1995, whereas, in fact, the first written notice to AXA is dated July 9th, 1996.

There is no reported case brought to my attention which would support the argument made by AXA. It is also a general principle of legislative interpretation that a Statute or Regulation will not be applied to act retrospectively, particularly if to do so would interfere with vested rights. I also note that there is no provision within Regulation 283/95, itself, which would suggest that it is to operate in any retrospective fashion.

The real question to be determined here is whether the provisions of this Regulation, enacted in May 1995, have any retrospective application to the facts of the case at hand, where the accident took place in October 1994 and the application for accident benefits was submitted in November 1994.

My determination of this issue is that Regulation 283/95 can have no such retrospective effect. I share the view expressed by the Arbitrator in the case of Smith vs General Accident Assurance Co., cited as (1997) O.I.C.D., No. 21, that Regulation 283/95 should only apply to a dispute where the application for accident benefits is received by the first insurer after May 27th, 1995, even if the date of the accident, as in this case, was prior to that date.

RULING:

For the reasons I have given, my ruling is that AXA is obliged to indemnify American Home with respect to any amounts paid by American Home by way of statutory accident benefits to Ms. Hasilo, and to others on her behalf, and that AXA Insurance must assume any ongoing obligation to Ms. Hasilo with respect to statutory accident benefits.

COSTS:

As I understand it, the costs of the parties have already been agreed upon and will follow the result of my Award herein. I assume that the account of ADR Chambers will follow the event, and should be sent to the attention of counsel for AXA Insurance. I would ask that the parties immediately contact the Co-ordinator at ADR Chambers if such is not the case.

Dated at Toronto this 22nd day of December, 1997 .

GLENN A. MacPHERSON, Q. C.
Arbitrator