In a unanimous decision, the Ontario Court of Appeal ruled that mere presence of an office in Ontario does not itself make Ontario’s Insurance Act the governing legislation for all auto insurance policies that an insurer underwrites. “Treating mere Ontario licensing as the sole reason to constitute an insurer as an ‘Ontario insurer’ would give Ontario insurance legislation extraterritorial effect.”
Facts
The insured was catastrophically injured in a collision in Nunavut where she was temporarily employed as a nurse supervisor. She was driving a Nunavut plated vehicle owned by the government of Nunavut and covered by a Nunavut motor vehicle insurance policy issued by Travelers Insurance Company of Canada to the government of Nunavut. Under this policy, she was entitled to Nunavut statutory accident benefits (“SABs”).
The insured was ordinarily resident in Ontario. She owned a car plated in Ontario and insured by CAA Insurance Company under the terms of Ontario Standard Automobile Policy (“OAP”). Under this policy, she was entitled to Ontario SABs, which are more generous than Nunavut SABs.
Under the terms of her OAP, the insured was contractually entitled to claim Ontario SABs from CAA. The OAP covers an insured wherever he or she drives in North America, and followed the insured to Nunavut. This was the basis on which the insured was entitled to seek SABs under the CAA policy, even though the collision occurred in Nunavut and did not involve her Ontario-insured car.
CAA, who had been paying those benefits, pursued Travelers for reimbursement of some or all benefits paid under s. 268 of the Act. CAA was successful at arbitration and appeal. Travelers appealed again.
Court of Appeal’s Decision and Reasoning
The Court of Appeal concluded that the arbitrator erred in law in finding that Travelers was an Ontario insurer required to arbitrate priorities with CAA. Further, if the arbitrator had been correct in that finding, he misapplied the section by failing to give effect to Nunavut law regarding the claimant’s status and the limits on her entitlement to Nunavut benefits under Nunavut legislation. The arbitrator should have found that s. 268(5.1) applied so that the claimant’s decision to seek statutory accident benefits from CAA was final and binding on CAA.
The Arbitrator relied on two factors to tie Travelers into the Ontario statutory regime for determining priorities: 1) Travelers had signed the Power of Attorney and Undertaking (“PAU”); and 2) Travelers’ status as an “Ontario insurer”. The Court of Appeal disagreed with both these determinations, considering at length the Supreme Court’s Decision in Unifund Assurance Co. of Canada v. Insurance Corp. of British Columbia (2003), 2003 SCC 40, the leading decision on the issue, and other applicable cases.
The Ontario Court of Appeal found that the Arbitrator was not correct in his bald assertion that “a signatory to the PAU essentially becomes an insurer in the province or Territory where the claim is brought and with that exposure to the liability limits, accident benefit limits, as well as the loss transfer and priority obligations, if any, of that jurisdiction”. The use and application of the PAU in favour of insureds is context specific. There was no basis for the arbitrator’s assertion that the PAU operates to extend “loss transfer and priority obligations” between or among insurers otherwise liable to compensate an insured under the Ontario Act’s provisions.
The second factor the arbitrator relied on was Travelers’ status as an “Ontario insurer”. The arbitrator assumed that Travelers was an Ontario insurer on the evidence presented by CAA — that it was licensed to undertake automobile insurance in Ontario, as required by s. 224(1) of the Ontario Act, and had offices in Ontario. However, the Ontario Court of Appeal writes that mere licensing, or the presence of an office, does not convert insurers into Ontario insurers for all purposes, nor does it make the Ontario Act the governing legislation for all of the automobile insurance policies they underwrite. Treating mere Ontario licensing as the sole reason to constitute an insurer as an “Ontario insurer” would give Ontario insurance legislation extraterritorial effect, which would be contrary to the essential holding in Unifund. There was no legal basis on which the arbitrator could force Travelers to pay more than the Nunavut limits under its Nunavut policy.
