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Are they spouses? To live together, or not to live together, that is the question.

 Aug 13, 2018 9:00 AM
by Kevin Mitchell

Akin to the controversy unleashed by Claudius’ usurpation of the Denmark crown, the July 10, 2018 endorsement of Justice Morgan in Royal v. Desjardins, 2018 ONSC 4284, relates to judicial review of Shari Novick’s February 24, 2017 priority private arbitration award in favour of Desjardins.

On February 24, 2014, Desjardins’ insured driver struck the claimant who was a non-occupant. Her claim for accident benefits was made to Royal as the insurer of the claimant’s ‘spouse’.  Definitions for that term are contained in s. 3 of the SABS, under “insured person”, and in s. 224 of the Ontario Insurance Act, “spouse”.  The pertinent part of the latter definition refers to two people living together conjugally outside of marriage continuously for at least three years.

Despite dating since 2008, the claimed spouses had actually only resided in the same household for one year pre-accident.  The question was, whether a literal or expanded definition of ‘lived together’ was the proper interpretation?  His Honour found it to be a question of mixed fact and law to which a reasonableness standard applied.  Royal preferred the literal construction.  Desjardins preferred the more global view, considering features of the couple’s life together having ‘notionally’ lived together for the requisite time.  It appears the arbitrator only looked to family law authorities concerning spousal support to aid in her interpretation of the legislation.

The Court of Appeal’s judgment in Economical v. Lott (1998), 155 DLR (4th) 179, was referenced, which found the contexts of the Family Law Act and Insurance Act schemes to be different despite the use of similar words.  Justice Morgan found that the arbitrator erred in finding family law policy applicable to insurance law without related discussion and articulating her reasons.  My view is that the arbitrator purported to choose the family law context by reason of the literal similarity between the definitions in the differing legislation.  When contrasted with Justice Morgan’s opposite finding, it may be a distinction without a difference.  Without further consideration of why she chose one context over the other may well have been unreasonable.  But it was upon the expanded review of the couple’s life that she decided they were spouses and in favour of Desjardins.  At paragraphs 25 & 27, Justice Morgan found that the outcome was unreasonable on the same basis but, more importantly, also found nobler the literal interpretation of the Insurance Act provision.  Presumably, any arbitration awards equating the old s. 224 definition of ‘cohabited’ (interpreted broadly) with ‘lived together’ (altered in 2005) are now in vain.  Accordingly, a declaration issued that the couple were not spouses and that Desjardins stood in priority and was required to indemnify Royal.

Will Desjardins recover the crown?  It is too early to tell if it will suffer the slings and arrows of a leave application to the Court of Appeal.

Kevin is a Partner of Samis+Company. Throughout his career, he has practiced almost exclusively in the area of accident benefit and bodily injury matters arising from motor vehicle accidents. He has also defended various non-motor vehicle bodily injury claims. Kevin carries on a robust practice involving privately arbitrated disputes between insurers in both priority and loss transfer matters. 

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