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AUTOMOBILE INSURANCE - Statutory conditions

Wednesday, April 25, 2018 @ 8:33 AM  


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Appeal by Dominion of Canada General Insurance Company(Dominion) from an order overturning an arbitrator's decision that the 90-day time limit within which an insurer was required to provide notice of a priority dispute to another insurer did not apply to notices to the insured. Dominion started paying statutory accident benefits (SABs) to an insured, Fan, and delivered a notice of dispute to Unifund Assurance Company (Unifund), claiming that Unifund was in a higher priority to pay Fan’s claim under s. 268(2) of the Insurance Act. The notice was not provided to the insured until 17 months later. By that time, the parties had agreed to arbitrate the dispute. The arbitrator concluded that Dominion was not precluded from pursuing its priority dispute even though it did not send the required notice to the insured until after the arbitration proceeding had been commenced. She accepted that s. 4 of the Disputes Between Insurers Regulation (Regulation) imposed a mandatory obligation on the first insurer who received an application to provide notice to the insured of its intention to dispute its obligation to pay benefits. However, the arbitrator concluded that the requirement that the insurer “shall also” give the insured person notice did not require the notice to be given within 90 days of receipt of the SABS application. Unifund successfully appealed the decision of the arbitrator. The appeal judge concluded that Dominion's failure to give notice of the priority dispute to the insured within the same time period as notice was required to be given to Unifund was fatal to Dominion's priority dispute. He found that the word "also" in s. 4 of the Regulation required that notice be given in a like manner to the notice provided to the other insurer under s. 3. He concluded that the word "also" would be meaningless if it did not reference and incorporate the only matter addressed in the giving of notice under s. 3 that was not specifically addressed in s. 4, namely the 90-day time limit. He also noted that an insured's right to initiate an arbitration had a one-year time limit and therefore would be lost if he were unaware of the dispute until after the one year had passed. Dominion appealed the decision, arguing that appeal judge applied an incorrect standard of review and that the arbitrator's decision was reasonable and ought not to have been overturned.

HELD: Appeal allowed. While there was a question of statutory interpretation at the heart of the arbitrator's decision on the preliminary issue, the question before her involved the interpretation of her home statute in the context of the overall SABS regime. No question of general law was engaged. Accordingly, the appropriate standard of review was reasonableness and the appeal judge erred in applying the correctness standard. The arbitrator's decision was reasonable. In arriving at her conclusion, the arbitrator considered the specific section of the regulation, the context of the regulation as a whole, the interests protected by the SABS regime, as well as the specific interests of the insurers and the claimant involved in the dispute. Her decision did not ignore the policy objectives of the Regulation. The timing of the notice to the insured of the priority dispute did not affect the insured's right to receive timely payment of benefits nor his participation rights.

Unifund Assurance Co. v. Dominion of Canada General Insurance Co., [2018] O.J. No. 1602, Ontario Court of Appeal, G.R. Strathy C.J.O., K.M. van Rensburg and G.T. Trotter JJ.A., March 27, 2018. Digest No. TLD-April232018005