The February 27, 2018 priority preliminary arbitration award of Ken Bialkowski in Aviva v. Intact involves an 18 year old, unemployed passenger in an Aviva insured auto injured on February 3, 2016. The issue was if Aviva’s late notice to Intact could be cured. The merits would suggest the claimant resolved with Aviva, at best, upon occupancy while at the next higher tier with Intact upon dependency.
That the award was rendered in six days is, to my mind, testament to the overarching principles at play despite that this issue is said to largely be a fact driven analysis. Upon my first run through of this case, and before I reached its conclusion, the most recent of the two main authorities relied upon came to mind; Justice Perell’s December 10, 2007 judgment in Liberty v. Zurich. Liberty had made extraordinary efforts to locate and notify a respondent insurer but still gave late notice and fell short at arbitration and on appeal. Ultimately, Liberty was found to have made reasonable efforts but the 90 days was felt to have been a sufficient time within which those efforts should have been made.
With the tools available to it, Aviva’s efforts in the case at hand fell well short in comparison and paragraph 27 of the award advises it failed on both prongs of the test. Recall the onus is on the party seeking to extend the 90 day notice period. Owing to the strictness of the rule’s application, and despite misgivings by or on behalf of the claimant, Aviva’s approach on an ‘escalating scale’ of investigation ‘commensurate with the lack of co-operation’ was in the end not consecrated. It was clear that with a basic factual foundation in hand, Aviva was within about a 24 hour period able to identify Intact and give both it and the claimant notice. Taking well more than 89 days to get to that point was their Achilles heel. With the breadth of insurers to whom a claimant can make a SABS claim, it is not without some understanding why a claimant might simply submit a claim to the insurer in respect of which they are an ‘occupant’. For the insurer first receiving the claim, if the claimant is not your named insured and an occupant of your described auto, it is potentially a lost opportunity not to make an early and robust investigation. Costs followed the cause. May the force be with Aviva if it chooses to appeal.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
When you represent an institutional client in priority or loss transfer disputes, is your client leaving money on the table? They probably are without realizing it. In priority, your client can claim as indemnity pretty much everything it paid out. For example, see the April 6, 2005 award of Guy Jones in Wawanesa v. Kingsway where he found surveillance, among other things, to be recoverable despite it not being mentioned anywhere in the SABS. It was not appealed. On the other hand, in loss transfer your client is arguably entitled to something less, in the nature of ‘benefits’ per s. 275 of the Insurance Act. Our Court of Appeal, in the September 11, 2012 loss transfer decision in Wawanesa v. Axa, 2012 ONCA 592, split 2-1 in favour of insurer examination expenses notbeing recoverable from a respondent. Leave to appeal was not sought. Blair, J.A., dissented but, in my opinion, made the better reasoned choice. This forum does not lend itself to why that is the case, however. Perhaps, as it is sometimes said, the dissent will someday become the majority. I recommend lawyers get into the habit of providing their applicant clients’ electronic payment summaries to respondents very early in both types of disputes, despite Requests for Indemnification existing in loss transfer. The nature of the electronic document translates a greater certainty to respondents of what has actually been paid out. Producing it early will assist a respondent dovetailing your Statutory Accident Benefits file to the amounts noted and can root out documentary deficiencies early on. Upon the summary, you would redact IE expenses, in loss transfer, and the fee accounts your client has paid to you and not much more. There will be some items over which a respondent balks as ‘loss control efforts’ or the like but, with the very high onus upon the respondent to impugn the payment, the applicant is sitting in the driver’s seat. I know of two cases that have discussed this test in priority disputes. I am of the mind more awards have been rendered in loss transfer upon which the following cases are predicated. The two cases are: the December 19, 2014 award of Bruce Robinson in Aviva v. Wawanesa and the December 7, 2017 award of Philippa Samworth in Economical v. Echelon. Neither were appealed.
Further, I subscribe to the theory that a successful litigant is entitled to costs, including repayment of portions of interim accounts rendered by the private arbitrator, relating to the prosecution/defence of the priority or loss transfer dispute. I also espouse a successful applicant to be entitled to interest upon its recovered indemnity, which can be quite substantial. Nearly $200,000.00 in interest alone was recently collected in a long standing priority dispute. To deny costs and suggest ‘it will all come out in the wash long term’ is to permit spurious claims or defences to be de rigueur and only serves to drive up costs at an industry level. Inspiring you to keep a tally when you let someone off the hook surely won’t work out for you or your client in the end. Costs make litigants and their lawyers accountable. Just ask anyone who practices before the Licence Appeals Tribunal (AABS) how they feel about compensatory costs being unavailable to either side. Early costs cases such as the March 8, 2012 award of Ken Bialkowski in Wawanesa v. Markel (loss transfer – in favour of the applicant) and the May 21, 2013 award of Vance Cooper in Security National v. Wawanesa (priority – in favour of the respondent) have lead to more and more jurisprudence in this area, in particular, the in-depth award of Scott Densem from August 22, 2014 in Economical v. Aviva, Her Majesty the Queen (MVACF), et al. None of the three awards were appealed.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
Recent work on cases has lead me to resurrect some older loss transfer case law that might still assist practitioners with their current cases. The first is the case from our Court of Appeal in Jevco v. Canadian General, dated August 6, 1993. Jevco sought appeal of the denial of its application to appoint an arbitrator in loss transfer (remember the provisions of automatic appointment in priority disputes do not apply to loss transfer and an Application is necessary where there is no agreement amongst the parties to appoint or whom to appoint). The use to which I again sought it out was regarding how a finding of fault in a related tort matter might affect a loss transfer matter that was subject to the ordinary rules of law, per Rule 5 of Regulation 668, instead of the Rules themselves. Recall the Fault Determination Rules were initially promulgated for property damage claims and are often a bit of a square peg in a round hole and have lead to a lot of litigation over their interpretation in the context of loss transfer. In overturning the original decision that a stay of loss transfer was warranted by reason of the existence of the tort action, Justice Griffiths, at the second paragraph of the Conclusion, and repeated at paragraph four thereof, focussed upon the intended expediency of the scheme and said quite emphatically that “any determination of fault in litigation between the injured plaintiff and the alleged tortfeasor is irrelevant.” Jevco was granted its arbitrator appointment with costs of the appeal but not of the Application, due to its novelty. The citation for the decision is 14 O.R. (3d) 545. There was no appeal taken beyond Ontario’s top Court.
The second case is the February 6, 2008 private arbitration award of Jay Rudolph in Unifund and Axa v. St. Paul. Reference to it is found at #11 of the list of decisions upon the Rudolph Mediation & Arbitration Services Inc. website (see http://rudolphmediation.com/ arbitration-decisions- released-by-j-jay-rudolph/ ). Unfortunately, the index of decisions on the website does not appear to be a complete list of all of Jay’s awards and they are not hyperlinked. Converse to the prior case, this case does permit consideration of a Highway Traffic Act conviction to govern in a loss transfer matter. The case is 25 pages long and too extensive to deal with comprehensively in a short summary. Suffice it to say that in this case accident benefits were being requested from St. Paul by the other two insurers due to the fault for the loss attributed to the driver of its described transport truck. She pleaded guilty to careless driving and both applicants sought to preclude St. Paul, by the flexible doctrine of abuse of process (as distinguished from issue estoppel, collateral attack or res judicata, which focus more on the interests of the parties), from adducing evidence inconsistent with the facts forming the basis for the conviction by way of guilty plea by her lawyer (she was not present at the HTA proceeding). Arbitrator Rudolph relied heavily upon the Supreme Court of Canada case in Toronto v. C.U.P.E., Local 79,  3 S.C.R. 77. In siding with the loss transfer applicants, he found that the three tests (fraud, fresh evidence and fairness) were not met by St. Paul, which would otherwise be reason to relitigate the liability issue and would enhance, not impeach, the principles of economy, consistency, finality and integrity of our judicial system. The HTA proceeding of St. Paul’s insured was admitted by the parties not to have been fraudulent. Fresh evidence must be admissible, discussed at page 21 of the arbitrator’s award, but still might be excluded if the explanation why it was not adduced at first instance is inadequate. Arbitrator Rudolph found St. Paul’s evidence not fresh and, although generally admissible, there was no reasonable explanation why it had not been adduced at the HTA proceeding. Having found as he did, he did not feel impelled to decide if the evidence would have affected the outcome of the HTA proceeding. He makes a particularly insightful comment at the bottom of page 23 why St. Paul should be bound by the conviction, which I invite readers of this summary to review and digest. In the final analysis, St. Paul was bound by the conviction, the facts essential to it and could not lead evidence contrary to those facts. Therefore, albeit subject to the latter, St. Paul was still permitted to lead evidence of the alleged contributory negligence of Unifund’s insured driver. Legal costs, although the party responsible was not specified, presumably followed the cause. St. Paul was responsible for the arbitrator’s account. The award was not appealed.
– Kevin Mitchell[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
A fire at commercial premises is at the center of a dispute between the insurers of a landlord and tenant
in the recently reported decision of Imperio Banquet v. Alternative Access and Mobility. The lease
required the tenant to contribute its proportionate share of the landlord’s premiums for ‘public liability,
fire and other coverages’ insurance. Other parts of the lease made it clear that the Additional Rent paid
by the tenant was for ‘Building Insurance’. The tenant was also required to obtain insurance but only to
insure the property and operations of the tenant. Moreover the tenant’s repair obligations expressly
excluded the portions of the building which were expressly the responsibility of the landlord, ‘namely
the roof, foundation, structure, outside walls and unit heaters.’ The tenant paid the additional rent. The
landlord obtained the building insurance. When a fire resulted in damage to the building as a result of
the negligence of the tenant’s employee, the landlord’s insurer attempted to subrogate. The court
granted summary judgment to the tenant, referring to Ross Southward v. Pyrotech in finding that where
the tenant contributed to the insurance obtained by the landlord, the tenant should obtain the benefit
of that insurance as it was evident that the underlying lease shifted the risk of this type of loss to the
landlord. Contractual risk shifting cases are often tricky and a close read of the underlying agreement, in
this case the lease is critical to understanding which party was to bear the risk of loss.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
Biblical proportions: Divining King Solomon (or Geddy Lee?) in the determination of priority disputes.[et_pb_section bb_built=”1″][et_pb_row][et_pb_column type=”4_4″][et_pb_text _builder_version=”3.9″]
In this January 5, 2018 priority dispute private arbitration award of Ken Bialkowski, the main issue was principle dependency; a construct of the definitions contained in s. 3(7)(b) of the SABS. The definition of ‘insured person’ in s. 3(1) of the SABS ties in the ‘dependant’ definition to the authorizing section for priority disputes: s. 268(2) of the Insurance Act. RBC, in respect of two claimants injured in an auto accident on April 4, 2015, sought to have TD assume handling of the SABS claims and indemnify it for benefits it had to date expended.
The elder claimants were both passengers in the RBC insured auto at the date of loss and, by s. 268(5.2), RBC would be the highest priority insurer if the two were found dependent upon their younger son. At a minimum, however, they were insured persons of RBC, based upon occupancy alone, and that is likely the reason their OCF-1s were sent to RBC in the first place. Notwithstanding, it was argued the claimants were dependent upon either of their two sons, each of which were the named insureds of the parties to the dispute.
The arbitrator started by defining the duration of the time period pre-loss to be considered that would give the best indication of the situation that existed as of the date of loss. This inquiry largely surrounded where they primarily resided. His review of the case law confirmed the preference by our Superior Court for the statistical LICO methodology over the mathematical one. The arbitrator astutely noted the mathematical approach was rooted in a criterion for dependency, which was rejected by the Ontario Court of Appeal back in 1986 in the seminal Miller v. Safeco case. RBC argued a third methodology, the plural approach. This approach is meant to determine upon whom a claimant is dependent when that claimant provides less than half of their own needs and one, of at least two individuals, provides a financial amount in excess of the claimant or anyone else who is also contributing. It, however, would appear to go against the established, and in my opinion inaccurately named, ‘51% rule’. To be accurate mathematically, it should be named the ‘50% + 1’ rule. Its distinct departure from the 51% rule is that the individual upon whom the claimant is said to be dependent contributes less than 50% of the claimant’s needs (not more) but more than the claimant or anyone else involved.
In this case it was argued by RBC the majority contributor was the eldest son; TD’s named insured. Even if RBC hadn’t admitted dependency upon its named insured (albeit not the greatest contributor), it still had the onus of proof in the dispute since it, at a minimum, was liable to pay benefits, per s. 268(3), based upon mere occupancy. The arbitrator found the sons to be equal financial contributors to their parents so, although they were each not independent, they were not considered principally dependent upon any one individual. RBC was found to be the priority insurer for both claimants and responsible for TD’s partial indemnity costs and the arbitrator’s account. The arbitrator thereby skirted support for what was said to be the genesis for the plural approach; the January 2013 award of arbitrator Scott Densem in Economical v. Aviva, which was not appealed, while yet paying homage to the 51% rule. It is too early to tell if this award will be appealed. However, with the standard of review still reasonableness, although requested to be revisited by the Court of Appeal in a pending decision where our firm was counsel, I doubt RBC will be so inclined.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]