by Michael A. Valdez
Introduction
The decision of the Ontario Court of Appeal in Ontario (Government and Consumer Services) v. Gore Mutual Insurance Company[1] stresses that there is no room for a causation analysis when interpreting the priority rules in s.268(2) of the Insurance Act. These priority rules are used to determine who is liable to pay statutory accident benefits after an automobile accident.
The Accident
Christopher Ugulini and his fiancée, Lindsay Lance, went snowmobiling with Christopher’s brother, Casey Ugulini. The couple was riding Christopher’s snowmobile, which was uninsured, whereas Casey drove his own snowmobile, which was insured under a policy issued by Gore Mutual Insurance Company.
As the two snowmobiles whisked along, Christopher’s snowmobile was leading and Casey’s snowmobile followed closely behind. Unfortunately, both vehicles were moving at dangerously high speeds in an area where snowmobiling was prohibited. Both snowmobiles collided with a tree that had fallen across the path they were travelling. The collisions occurred within one second of each other and tragically resulted in the deaths of both men. Lindsay was the only survivor. Lindsay applied for statutory accident benefits and a claim for death benefits was also made on behalf of Christopher. Although it was clear that the benefits were to be paid, it was unclear as to who should be paying according to the priority rules enumerated in s.268(2) of the Insurance Act.
Section 268(2) of the Insurance Act: The Priority Rules
The priority rules, in descending order, are as follows:[2]
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 statutory accident benefits arose, (emphasis mine)
iv. if recovery is unavailable under subparagraph i, ii or iii, the occupant has recourse against the Motor Vehicle Accident Claims Fund.
Initial Analysis of the Priority Rules
The late Christopher’s failure to insure his snowmobile immediately nullified any possible application of subparagraphs (i) and (ii), leaving Lindsay to rely on either subparagraph (iii) or subparagraph (iv) in her claim for statutory accident benefits.
According to the wording of subparagraph (iii), Lindsay would be able to claim accident benefits from the insurer of Casey’s snowmobile, Gore Mutual, provided that it could be shown that Casey’s snowmobile was “involved in the incident.”
If it could not be shown that Casey’s snowmobile was “involved in the incident,” or in other words, if the two snowmobile collisions were found to be separate events, then Lindsay would have to claim benefits under subparagraph (iv). This would mean that the benefits would instead be paid by Ontario’s Motor Vehicle Accident Claims Fund.[3]
Ontario argued that Gore Mutual should be the one to pay the benefits, whereas Gore Mutual argued that this role should properly fall to Ontario.
Arbitration Decision
Ontario and Gore Mutual went to arbitration to resolve this issue. The arbitrator held that Casey’s snowmobile, insured by Gore Mutual, was not “involved in the incident.” Accordingly, the arbitrator concluded that subparagraph (iv) applied and that the benefits should be paid from Ontario’s Motor Vehicle Accident Claims Fund.[4]
He stated that for a vehicle to have been “involved in the incident” there would have to be participation, as well as proximity of time and space. He explained that while there was clearly proximity of time and space between Casey’s insured snowmobile and the couple’s uninsured snowmobile, Casey’s snowmobile did not participate in the crash of the leading snowmobile that the couple was riding.[5]
He deemed such participation “too remote” and stressed that “there must be some action on the part of the driver of the alleged ‘involved’ vehicle that caused or contributed to the collision giving rise to the injuries sustained by the claimants.”[6]
Reversal at the Superior Court, and the difference between “Incident” and “Accident”
Ontario appealed the arbitrator’s decision to the Superior Court of Justice, where Myers J. reversed the arbitrator’s decision. In doing so, he held that the arbitrator committed an error of law by importing a causation analysis into the no-fault priority rules of s.268(2) of the Insurance Act. Myers J. noted that there seemed to be no rationale for “engraft[ing] a fault criterion into the priority ladder” since the statue did not mention causation anywhere.[7]
Myers J. also clarified that the term “incident” in subparagraph (iii) merely means “some event, occurrence, or happening,” as opposed to the term “accident,” which means an incident in which injuries are caused. The effect of this minute distinction is that the insured vehicle (in this case, Casey’s snowmobile,) did not need to be involved in the crash of Christopher and Lindsay’s snowmobile for subparagraph (iii) to apply. As a result, Myers J. held that Gore Mutual should be the one to pay the benefits.[8]
The Court of Appeal
In its appeal, Gore Mutual argued that the Superior Court judge wrongly interpreted the arbitrator’s reasoning as trying to import a causation requirement into the priority rules. Instead, Gore Mutal posited that the arbitrator actually applied a multi-factored analysis to properly find that Casey’s snowmobile was not involved in the crash of the snowmobile that Christopher and Lindsay were riding. The Court of Appeal disagreed and held that regardless of the type of analysis the arbitrator purported to apply, in reality, he incorrectly inserted a causation analysis into the priority rules.[9] The Court of Appeal held that Myers J. was correct both in holding that a causation analysis was inappropriate, and in his clarification regarding the distinction between the terms “incident” and “accident.”[10] Accordingly, the appeal was dismissed.
Conclusion and Takeaway
Ontario (Government and Consumer Services) v. Gore Mutual Insurance Company is significant for all parties involved in disputes regarding the payment of statutory accident benefits. It stands as a warning to both lawyers and arbitrators alike to refrain from importing criteria that we merely believe should be applied to payment disputes, no matter how well intentioned it may be. This case also provides helpful clarification of the terms “incident” and “accident,” two often confused terms in the insurance context. It thus serves as a convenient point of reference should the interpretation of words ever become at issue, which they so often do in the area of insurance litigation.
[1] Ontario (Government and Consumer Services) v. Gore Mutual Insurance Company, 2023 ONCA 433 (CanLII), https://canlii.ca/t/jxpv2
[2] Insurance Act, R.S.O. 1990, c. I.8
[3] Ontario supra note 1 at para 12.
[4] Ibid at para 13.
[5] Ibid at para 16.
[6] Ibid.
[7] Ibid at para 20.
[8] Ibid.
[9] Ibid at paras 21-28.
[10] Ibid at para 30.
