Arbitrator: Jonathan T. Fidler
Date: 98-12-28

IN THE MATTER OF an arbitration pursuant to the Arbitrations Act, 1991 AND IN THE MATTER OF a dispute between insurers pursuant to the Insurance Act, R.S.O. 1990, Ch. I.8 as amended

BETWEEN:

AXA INSURANCE COMPANY Applicant - and - MARKEL INSURANCE COMPANY OF CANADA Respondent

David Murray for AXA Insurance Company
Mark Wilson for Markel Insurance Company of Canada

ARBITRATOR'S DECISION

J. T. Fidler - Arbitrator

INTRODUCTION

This is an arbitration brought pursuant to Regulations made under the Insurance Act to resolve a dispute between AXA Insurance Company and Markel Insurance Company of Canada, as to which of the two companies is responsible for the payment of benefits pursuant to the Statutory Accident Benefits Schedule ("SABS") to the family of the late Edward Ferguson, who was killed as a result of a motor vehicle accident which took place on January 30, 1996.

The parties hereto entered into an arbitration agreement pursuant to the provisions of the Arbitrations Act, 1991, dated June 16, 1998, which agreement provides that either party may appeal the arbitrator's award to the Court without the need to seek leave, on a question of mixed fact and law or on a question of law.

THE ISSUES

There are two issues that need to be decided at this arbitration. They are as follows:

1. Was the late Edward Ferguson deemed to be a named insured under the Markel Insurance Company policy, pursuant to Section 91(4) of Ontario Regulation 776/93, as amended by Ontario Regulation 781/94.
   
   
2. If the late Edward Ferguson is deemed to be a named insured under said Section 91(4) at the time of the said accident, was he an "occupant" of an automobile at the time of the said accident, so as to set up the priorities set out in Section 268 of the Insurance Act.

THE FACTS

Certain facts were admitted to and an Agreed Statement of Fact was filed as an exhibit at the arbitration. In addition three witnesses, Nadine Kueneman, Kyle Reading, and Dawn Ferguson, gave evidence viva voce.

The following are the relevant facts that were agreed upon:

1. At all material times AXA Insurance Company, an insurance company licenced to carry on business in the Province of Ontario insured, pursuant to a standard policy of automobile insurance, a 1987 Cadillac motor vehicle;
   
   
2. At all material times Markel Insurance Company of Canada, an insurance company licenced to carry on business in the Province of Ontario insured, pursuant to a standard policy of automobile insurance, a 1987 Freightliner tractor and a 1989 Trailmobile trailer;
   
   
3. The late Edward Ferguson was the named insured under the AXA policy;
   
   
4. Southlake Transportation Systems Inc. was the named insured under the Markel policy;
   
   
5. Edward Ferguson was listed as a driver on the Markel policy;
   
   
6. Southlake Transportation Systems Inc. is a corporation, and the late Edward Ferguson is an individual who at all material times was living and ordinarily present in Ontario;
   
   
7. At all material times Edward Ferguson was an independent contractor who had not elected to be covered by the Workers' Compensation Act; 8. On January 30, 1996 the late Edward Ferguson drove the vehicle insured under the Markel policy to the Stelco South Billet Yard, Rod Mill #2 in order to make a delivery of steel. Once there he stopped his vehicle outside the loading bay, exited his vehicle, and entered the loading bay to wait his turn to unload his truck. At all material times the said Mr. Ferguson was outside of his truck standing approximately 30 feet away, when he was struck by a piece of wood which had been propelled off the back of a tractor trailer owned by Muirhead Transportation while that vehicle was exiting the loading bay. As a result of being struck Mr. Ferguson suffered serious injuries which led to his death;
   
   
8. On or about February 23, 1996 the Ferguson family through their solicitor, contacted the claims departments of both the Applicant and the Respondent, requesting application forms for statutory accident benefits. An application for statutory accident benefits was submitted to the Applicant AXA Insurance Company on March 18, 1996, as a result of which the Applicant paid accident benefits to or on behalf of various members of the Ferguson family pursuant to the "SABS";
   
   
9. The Applicant gave notice to the Respondent and to the Ferguson family of the dispute as to priority on June 13, 1996;
   
   
10. By correspondence dated June 22, 1996 the Ferguson family through their solicitor, objected to the claim for accident benefits being transferred to the Respondent Markel Insurance Company of Canada.

Nadine Kueneman was called to give evidence viva voce. She is the accounting manager for a company called Transport Financial Services. She testified that this company performs accounting and bookkeeping services for the trucking industry, and performed those services for Southlake Transportation Systems Inc. and for the late Edward Ferguson. She testified that Southlake Transportation Systems Inc. was a limited company and was the registered owner of the 1987 Freightliner trailer insured by the Respondent Markel Insurance Company of Canada.

She testified that Southlake Transportation Systems Inc. paid for the vehicle, the licences, the insurance, the maintenance, and all other costs and charges related to the operation of the vehicle. She further testified that the late Mr. Ferguson was the only employee of Southlake Transportation Systems. He was paid a salary based on his drawings with deductions done at the end of the year. He would then be issued a T4 slip. She further testified that the late Mr. Ferguson was the president of Southlake Transportation Systems Inc., and his wife Dawn Ferguson was the secretary. Mr. Ferguson owned 2,966 class A shares and one common share, with his wife Dawn Ferguson owning one class B share.

Kyle Reading also testified at the hearing. He is now an accountant at Ernst & Young but was with Transport Financial Services at the time of the accident, and was the person who was in charge of the Southlake Transportation Systems Inc. and Ferguson accounts. He confirmed that Southlake Transportation Systems Inc. was an incorporated company, with the late Mr. Ferguson as the president.

He further confirmed that Southlake Transportation Systems Inc. paid for the said truck and all of the expenses related thereto. He did know that Southlake Transportation Systems Inc. had some sort of arrangement with a company called Torque Transport, whereby it would haul for that company. His evidence was that Torque Transport paid Southlake Transportation Systems Inc. who would then pay Mr. Ferguson his salary. All operating licences for the truck were in the name of Southlake Transportation Systems Inc.

Dawn Ferguson is the late Mr. Ferguson's wife. She testified that her understanding of her husband's job was that he was a truck driver for Southlake Transportation Systems Inc., and she confirmed that the company owned the truck and that no one else ever used it. The company carried on business out of her home, and the tractor trailer was left in the driveway of her home. There was no other office location for Southlake Transportation Systems Inc.

She confirmed that her husband could do whatever he wanted to do with the vehicle, and had 24 hour per day, seven day per week access to it. He was the one who decided what loads to take, what customers to work for, and what the maintenance schedules were and who would do it. She confirmed that he had total control of the vehicle and made all of the decisions.

THE LAW

Section 91(4) of the Regulation as amended provides as follows:

"91(4) Subject to sub-section (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."

"268(2) Liability to pay. The following rules apply for determining who is liable to pay statutory accident benefits:

1. In respect of an occupant of an automobile,
   
   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 subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant;
   
   iii. if recovery is unavailable under subparagraph i or ii, the occupant has recourse against the insurer of any other automobile involved in the incident from which the entitlement to no-fault benefits arose,
   
   iv. if recovery is unavailable under subparagraph i, ii or iii, the occupant has recourse against the Motor Vehicle Accident Claims Fund."

Mr. Murray, the solicitor for the Applicant AXA Insurance Company, conceded that he has to satisfy me that the late Edward Ferguson shall be deemed to be the named insured under the Markel policy pursuant to Section 91(4) above. If he succeeds, he then has to satisfy me that the late Mr. Ferguson was at the time of this accident, an "occupant" of the Markel truck, so as to invoke the priorities set out in Section 268 above. He conceded that if he fails on either of these two issues, then Mr. Ferguson's family had the right to select from whom they will claim accident benefits, and as they have already made the selection to claim benefits from AXA Insurance Company and have objected to a transfer of the accident benefits to Markel Insurance Company of Canada, the benefits have to be paid by AXA Insurance Company.

THE SECTION 91(4) ISSUE

Mr. Murray basically submitted that under Section 91(4) the truck was made available for the regular use of the late Mr. Ferguson, who was living and ordinarily present in Ontario, by Southlake Transportation Systems Inc. a corporation, and therefore Mr. Ferguson would be deemed to be the named insured under that policy. He said that although Southlake Transportation Systems Inc. was a one person company, I ought not to pierce the corporate veil.

Mr. Wilson on behalf of Markel Insurance Company of Canada argued that Mr. Ferguson was really working for Torque Transport at the time, and therefore the vehicle was being made available not for Mr. Ferguson but rather for Torque Transport, as they held the bill of lading. He urged me to take a functional view in respect of what was happening with the truck, and make a finding that the truck was really Mr. Ferguson's personal truck and not Southlake Transportation System Inc.'s truck.

It is clear from the documents filed with me, and from the evidence of Nadine Kuenemen and Kyle Reading that Southlake Transportation Systems Inc. was a legitimate corporation, incorporated for the purposes of carrying on Mr. Ferguson's trucking business. It paid for the truck, was the registered owner of the truck, entered into the contracts in regards to the use of the truck, and was in all ways responsible for the truck, both in terms of licencing and maintenance. No evidence whatsoever was led to indicate anything other than the fact that Mr. Ferguson intended to use a limited company to own and operate this truck. The company issued him a T4 slip and made appropriate employee deductions. I see no reason therefore why the corporate veil should be pierced, and I find that Southlake Transportation Systems Inc. a corporation, made the truck available for the regular use of Edward Ferguson who was living and ordinarily present in Ontario, and as such the said Edward Ferguson is deemed to be the named insured under the Markel Insurance Company of Canada policy.

SECTION 268 (OCCUPANT) ARGUMENT

Having found that Mr. Ferguson is deemed to be the named insured under the Markel Insurance Company of Canada policy, it is now necessary to determine whether or not at the time of the accident he was the "occupant" of the vehicle at the time of the accident.

Section 268(5.2) provides as follows:

"If there is more than one insurer against which a person may claim benefits under sub-section (5) and the person was, at the time of the incident, an occupant of an automobile in respect of which the person is the named insured or the spouse or a dependent of the named insured, the person shall claim statutory accident benefits against the insurer of the automobile in which the person was an occupant."

Having found that Mr. Ferguson was a named insured under both the AXA Insurance Company and the Markel Insurance Company of Canada policies, it is necessary to determine whether he was "an occupant" of the automobile at the time of the accident, as Section 268(5.2) requires his family to claim the statutory accident benefits against the insurer of the automobile in which he was an occupant.

Counsel referred me to a number of cases in this regard, none of which were specifically decided under this section. They are, however, helpful in looking at how Courts have dealt with occupancy of automobiles in accident situations.

The first case is DeGurse v. Henry (1984) 47 O.R. (2d) 172, a decision of Mr. Justice Henry. In that case the plaintiff was involved in an accident and got out of his vehicle to survey the situation when he was struck by another vehicle driven by the defendant. At the trial counsel for the plaintiff sought to have the jury instructed that the plaintiff was entitled to the benefit of the presumption in favour of pedestrians created by the Highway Traffic Act.

The Court held that the plaintiff was not a pedestrian and therefore not entitled to the presumption in favour of pedestrians created by the Highway Traffic Act. The Court felt that the plaintiff who had just descended from his vehicle and was taking stock of the situation, is to be equated with the term "occupant", as he was not in the same position as a stranger to the accident such as a pedestrian walking along the highway.

I was also referred to the case of Breslin v. INA Insurance Company of Canada, (1986) 19 C.C.L.I. 157, a decision of Justice Berger of the Alberta Court of Queen's Bench. The facts in this case were similar to those in the DeGurse case, in that the plaintiff lost control of her vehicle and hit a guard rail. She got out of her vehicle to assess the damage when she was struck by another vehicle. The issue in that case was whether she was an "occupant" of her vehicle or a "pedestrian", as that determination made a difference as to which of two insurance companies paid her no-fault benefits. The Court referred to the case of Metcalfe v. General Accident Assurance Company [1930], 2 D.L.R. 265, a decision of the Ontario Court of Appeal, involving an action under a home owner's policy where coverage against loss of fire required the residence to be "occupied as a dwelling".

In that case the plaintiff was not in personal occupation of the residence, but was living temporarily with her mother, although intending to return when the fire took place. The Court reasoned that the wording used in the policy should not be interpreted with absolute and literal strictness, so as to require a personal and constant occupation, and in reaching a conclusion in favour of coverage, pointed to the fact that non-occupancy was temporary and that the plaintiff had no intention to abandon the house as a permanent dwelling. In the Breslin case an analogy was drawn to the Metcalfe reasoning, and the Court ruled that the plaintiff was still an occupant of her vehicle as she had not abandoned the same, had not formed the intention to abandon the vehicle, and throughout maintained care and control of the vehicle.

I have also been referred to Kyriazis v. Royal Insurance Company of Canada (1991) 82 D.L.R. (4th) 691, a decision of the Ontario Court (General Division). In this case the plaintiff while standing beside his car clearing snow from the windows was struck by another car, and there was dispute as to whether his insurance company or the insurance company of the striking car should be paying his no-fault benefits.

Each policy defined "insured person" to include an occupant of the described automobile and "occupant" was defined to mean "a person driving, being carried in or upon or entering or getting onto or alighting from an automobile". In this case the Court went through a number of cases including the DeGurse, Metcalfe and Breslin cases, as well as a number of American decisions which have applied a "zone of connection" test when dealing with a definition of "occupant", similar to that contained in the standard automobile insurance policy. Justice Abbey in the Kyriazis case found that there has been a reluctance in Canada to use the "zone of connection" test in order to determine issues of occupancy, in the face of a definition of "occupant" in the policy.

The word "occupant" is defined in the standard automobile insurance policy applicable to the case at bar, as follows:

"In this policy an occupant is a person, including the driver, in or on an automobile, or getting into, on, out of, or off an automobile".

It should also be noted that under Section 4 of the standard automobile policy where accident benefits coverage is set out, Section 4.1 indicates that in looking at who is covered you have to look at the statutory accident benefits schedule, which is set out in both the Insurance Act and in the Regulations pursuant thereto. Section 224(1) defines "occupant" as follows:

"Occupant", in respect of an automobile, means,

1. the driver,
2. a passenger, whether being carried in or on the automobile,
3. a person getting into or on or getting out of or off the automobile."

It seems to me that "the driver" is an "occupant" of the automobile for the purposes of accident benefits. In my view Mr. Ferguson was clearly "the driver" of this truck. He was the one who drove the truck to Stelco, he was there waiting for the truck to be unloaded, and was going to be the one who drove the truck away. The fact that he was temporarily absent from the vehicle while waiting his turn at the loading dock I do not think in any way stopped him from being "the driver". I have no doubt that if anyone had asked who the driver was at the Stelco plant that day for the purpose of having that vehicle moved, no one would have had any trouble identifying Mr. Ferguson as "the driver". Nowhere do I see there to be a requirement that in order for someone to be "the driver" for the purpose of accident benefits, that person must be actually driving the automobile at the time, or for that matter physically inside of it. Mr. Ferguson never relinquished control of the vehicle, and was still exercising some of the duties of the driver at the time of the accident. This conclusion in my view is consistent with the findings in the DeGurse, Metcalfe and Breslin cases.

The Kyriazis case can be distinguished, as in that case the policy defining "occupant" required the occupant to be "a person driving" as opposed to "the driver".

DECISION

I therefore find that the late Mr. Ferguson was deemed to be a named insured under the Markel Insurance Company of Canada policy, pursuant to Section 91(4) of the Regulation. There is no issue that he was also a named insured under the AXA Insurance Company policy. I also find that he was an "occupant" of the Markel Insurance Company of Canada vehicle at the time of the accident, and therefore pursuant to Section 268(5.2), Markel Insurance Company of Canada is responsible for the payment of his no-fault benefits.

AXA Insurance Company having already paid the benefits, therefore will be entitled to be reimbursed by Markel Insurance Company of Canada for all of the benefits paid. I have not been asked to make any ruling as to the amounts involved, and trust that the parties will deal with this as between themselves. I may certainly be contacted if there is a further dispute in regards to the actual amount.

COSTS

It was agreed by the parties that the issue of costs be left to my discretion. As AXA Insurance Company has been successful in this arbitration, I see no reason why costs should not follow the event, and AXA is therefore entitled to recover its party and party costs of this arbitration from Markel Insurance Company of Canada. In addition Markel shall pay the expenses of the arbitrator.


December 18, 1998 " Jonathan T. Fidler" Jonathan T. Fidler
Arbitrator