DECISION ON PRELIMINARY ISSUES

Transcription

1 BETWEEN: MAURICIO MARIONA Applicant and CANADIAN GENERAL INSURANCE COMPANY Insurer DECISION ON PRELIMINARY ISSUES Issues: Mauricio Mariona was injured in a motor vehicle accident on July 17, He received statutory accident benefits from Canadian General Insurance Company ( Canadian General ), payable 1 under the Schedule. Mr. Mariona applied for arbitration under the Insurance Act, R.S.O. 1990, c.i.8, as amended. At the time of the accident Mr. Mariona was a passenger in a car owned and operated by his son, Anixar Mariona, ( Anixar ). Canadian General alleged that Anixar only arranged insurance coverage with their company after the accident, and that the Applicant therefore had no statutory 1 The Statutory Accident Benefits Schedule Accidents after December 31, 1993, and before November 1, 1996, called the Schedule in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94 and 781/94. Effective July 1, 1998, the Ontario Insurance Commission was changed to the Financial Services Commission of Ontario, pursuant to the Financial Services Commission of Ontario Act, S.O. 1997, c.28.

2 accident benefits coverage from Canadian General with respect to this accident. The Insurer sought a determination of the coverage question as a preliminary issue, and requested rectification of the policy. Mr. Mariona disputed that an arbitrator at the Ontario Insurance Commission had jurisdiction to determine the question of coverage. He also submitted that the policy was in force at the time of the accident, and alternatively, that Canadian General was estopped from denying responsibility for payment of his statutory accident benefits. The issues in this hearing are: 1. Do I have jurisdiction to determine the question of coverage? 2. If the answer to question 1 is yes, is coverage available to Mr. Mariona under a policy of insurance, A PLA? 3. Is Canadian General entitled to rectification of the policy to reflect an effective time of coverage as 5:00 p.m. instead of 12:01 a.m. on July 17, 1995, as stated on the policy? Result: 1. I have jurisdiction to determine the question of coverage. 2. Coverage is available to Mr. Mariona under the policy. 3. Rectification is not an appropriate remedy. 3. Mr. Mariona s claims for entitlement to various statutory accident benefits, interest, a special award and expenses may proceed to a hearing, scheduled for November 30,

3 Evidence and Findings: Background Mr. Mauricio Mariona was injured in a motor vehicle accident on July 17, At the time of the accident he was a passenger in a car which was owned and driven by his son, Anixar Mariona. Following the accident, the Applicant applied for and was paid statutory accident benefits by 2 Canadian General. Approximately seven months later, Canadian General took the position that coverage had been effected after the accident and there was no coverage available to Mr. Mariona under the policy. Canadian General asked for rectification of the policy so that instead of stating the effective time of coverage as July 17, 1995, at 12:01 a.m., prior to the accident, the policy would state that the effective time was at 5:00 p.m., after the accident. The Applicant alleges that coverage was effected prior to the accident. Jurisdiction On the first day of the hearing, the Insurer requested that the hearing be confined to a determination of the question of coverage as a preliminary issue. The Applicant opposed this request. He submitted that questions of coverage had been removed from the jurisdiction of an arbitrator at the Commission by Ontario Regulation 283/95, the Priorities Dispute Regulation, which came into force on May 27, He submitted that my jurisdiction was limited to determining Mr. Mariona s entitlement to statutory accident benefits. I did not agree with the Applicant s submissions and granted the Insurer s request to hear the preliminary issue. These are my reasons. 2 Letter dated February 28,

4 Section 268(1) of the Insurance Act provides that statutory accident benefits coverage forms part of every automobile policy issued in Ontario. Following an accident, statutory accident benefits coverage may be available under more than one insurance policy. Section 268 of the Insurance Act sets out the rules for determining which insurer is liable to pay statutory accident benefits in such circumstances. If there is a dispute as to which insurer is liable, section 268(8) of the Act requires the insurer to pay those particular benefits which the Schedule requires to be paid pending resolution of the dispute. Section 1 of the Priorities Dispute Regulation provides that All disputes as to which insurer is required to pay benefits under s.268 of the Act, must be resolved by private arbitration and not by arbitration at the Ontario Insurance Commission. In this arbitration, the only parties before me are the Applicant, Mauricio Mariona, and the Insurer, Canadian General Insurance Company. There is no other insurer before me. I have not been asked to determine whether Mr. Mariona is entitled to claim benefits under any other policy. I was not persuaded that the issue before me was a priority dispute within the scope of section 1 of the Priorities Dispute Regulation. The question of an arbitrator s jurisdiction was also raised in the case of Abdulbaki and Royal 3 Insurance Company of Canada. In that case, an applicant alleged that the issues to be arbitrated had been settled, but the insurer had reneged shortly before the hearing. At the hearing, the applicant asked the arbitrator to add the question of whether a binding settlement had been reached, to the issues to be arbitrated. The Insurer submitted that the issue was a matter of contract law, which could lead to an award of damages, or specific performance. However, since it was not an issue of entitlement to or the amount of statutory accident benefits under section 279 of the Insurance Act, it was outside of the scope of an arbitrator s jurisdiction. In the Abdulbaki case, Arbitrator Palmer found that the issue which the applicant raised was a preliminary question which had to be determined before she could decide the ultimate issue of his 3 (OIC A , December 12, 1995) Arbitrator Palmer s reasons were cited with approval by Director s Delegate Naylor in Branchaud and Co-operators ( OIC P , May 2, 1997) 4

5 entitlement to statutory accident benefits. Although express authority to determine the preliminary question had not been conferred by the legislature, Arbitrator Palmer found that she had the requisite authority by necessary implication. I agree with and adopt her reasons. In this case, Mr. Mariona claims that he is entitled to statutory accident benefits under a policy of insurance with Canadian General. The insurer has raised a defence to his claim, alleging that there was no coverage available to him at the time of the accident. If there was no coverage, there is no entitlement from Canadian General. If there was coverage, then an arbitrator can determine the issue of entitlement. I ruled that the question of whether there was coverage was a preliminary question which I must determine before the issue of Mr. Mariona s entitlement to and the amount of any statutory accident benefits could be determined. Coverage was therefore an issue within my jurisdiction. According to the documents which were filed, Canadian General has initiated a private arbitration under the provisions of the Priorities Dispute Regulation. In that arbitration, Canadian General alleges that another insurer is responsible for payment of Mr. Mariona s statutory accident benefits. I accept that a similar inquiry with respect to the question of coverage may be made by that arbitrator, and conceivably, inconsistent findings of fact may result. The legislature has provided for multiple proceedings involving the same accident, and it must be deemed to have considered this possibility when promulgating Ontario Regulation 283/95. However Canadian General s actions in relation to another insurer under that Regulation cannot remove my jurisdiction to determine an issue between Canadian General and Mr. Mariona. The Applicant submitted that he was taken by surprise by the coverage issue. I find that the correspondence filed at the hearing establishes that the question of coverage under policy A PLA has been an ongoing issue between the parties since February 28, The question was raised again during the pre-hearing. At the pre-hearing, the Insurer attempted to add another insurer as a party to this arbitration, and the Applicant opposed this request. As part of 5

6 the agreement regarding production of documents, the Applicant asked the Insurer to provide 4 documents with respect to the coverage issue, and the Insurer agreed to do so. For these reasons, I do not accept that the Applicant was taken by surprise when the Insurer raised this issue at the hearing. The parties were given an opportunity to provide additional submissions in writing. In those submissions, the Applicant submitted, for the first time, that the question of coverage had not been mediated by the Insurer. I find that the defence raised by the Insurer is a question which 5 flows from the Applicant s claim of entitlement to benefits under the policy. It is not a separate head of benefits which must be mediated. I agree that the Insurer should not generally be permitted to assert defences for the first time at a hearing. However, I did not accept that Canadian General raised this defence for the first time at the hearing, or that the Applicant was taken by surprise when this issue was raised at the hearing. Coverage The policy On July 17, 1995, the Applicant was a passenger in a 1984 Scirocco vehicle owned and operated by his son, Anixar Mariona, when the Scirocco was involved in an accident. The Applicant has produced a certificate of insurance, which shows that the Scirocco in question was insured effective July 17, 1995 at 12:01 a.m. Since the motor vehicle accident occurred at approximately 2:00 p.m., after the policy is stated to be in effect, the Applicant has established, on a prima facie basis that there was coverage under this policy at the time of the accident. 4 Letter dated May 15, 1997 setting out agreement regarding production of documents. Item 3. 5 Kotsiakos and State Farm Mutual Automobile Insurance Company, (OIC A , July 26, 1994) 6

7 I heard the testimony of two witnesses at the hearing. Mr. Anixar Mariona testified on behalf of the Applicant that an oral agreement was reached at 6:00 a.m. on July 17, 1995 before the accident; Ms. Wendy Knibbs testified on behalf of the Insurer that an oral agreement was reached at 5:00 p.m. that day, after the accident. Because the oral evidence conflicted with the effective time on the written certificate, I raised the question of whether the parol evidence rule prevented me from considering any of the oral evidence which the parties had adduced. That rule states that if the language of the written contract is clear and unambiguous, then no evidence may be 6 admitted to alter, vary or interpret in any way the words used in the writing. I find nothing unclear or ambiguous in the time of 12:01 a.m. which is stated on the policy. Counsel for the Insurer relied on the definition of contract in section 1 of the Insurance Act which states contract means a contract of insurance and includes a policy, certificate, interim receipt, renewal receipt, or writing evidencing the contract, whether sealed or not, and a binding oral agreement. He submitted that this definition permitted me to consider evidence of an oral agreement along with the certificate of insurance to construe the true intent of the parties. The oral evidence, if admitted, contradicts an unambiguous provision in a written certificate of insurance. I have considered the provisions of section 15 of the Statutory Powers Procedure Act and of section 36 of the Dispute Resolution Practice Code. These provisions grant an arbitrator a broad discretion to determine the relevance, materiality and admissibility of evidence, and to admit evidence which would not be admissible in a court, subject to certain provisos. However, the parol evidence rule is a fundamental aspect of the law of contract, designed to preserve the integrity of the written contract. I find that my general discretion to admit evidence should be exercised in a manner consistent with the parol evidence rule, and that I should not admit oral evidence with respect to the effective time at which the policy was issued. 6 Fridman, The Law of Contract in Canada, (third edition), (Toronto: Carswell, 1994) 7

8 I conclude that by providing a copy of a policy with an effective time prior to the time of the accident, the Applicant has discharged the onus on him to establish coverage. However, if I am wrong with respect to the application of the parol evidence rule, I will address the Insurer s claim for rectification of the policy. Rectification Ms. Wendy Knibbs, a customer service representative employed by Ontario Insurance Service, described the usual sequence of events when she assists a customer in obtaining coverage, and how the certificate came to be issued effective 12:01 a.m. Ms. Knibbs testified that she has been a broker since February 1993, and employed by Ontario Insurance Service for eight and a half years. Ontario Insurance Service is an insurance broker which deals direct, only writing policies for Scottish & York, and not for any other 7 insurance company. Canadian General owns Scottish &York. Ms. Knibbs stated that only customer service representatives have the authority to effect coverage or changes in coverage. The hours of work for a customer service representative in July 1995 were between 8:30 a.m. and 5:00 p.m. When Ms. Knibbs assists a customer who calls to obtain coverage, she takes information with regard to financing, purchase price, use of vehicle, and the coverages required. She then puts the customer on hold, and inputs the information in the computer. This takes two minutes. She is then able to provide the customer with the cost of the premium. The computer system generates a form which is sent to the data centre. At the data centre the form is printed out overnight and mailed to the customer the next day. 7 Ms. Knibbs testified that Canadian General subsequently purchased Scottish & York. Ms. Knibbs testified about the corporate relationships between Canadian General, Scottish & York, and Ontario Insurance Service. After her testimony in this regard, counsel for the Insurer stated that he was not sure that this witness was an expert in the corporate structure, or that I should rely on her evidence in this regard. While Canadian General disputed the question of coverage, Canadian General did not dispute that it was a proper party to this arbitration. 8

9 Ms. Knibbs testified that the computer system automatically generates a policy which shows an effective time as 12:01 a.m. on the date on which coverage is obtained. As far as she is aware, she has no way of customizing the form, or altering this time to reflect the actual time at which the customer called and the policy was written. If Ms. Knibbs testimony is accurate, then all of the policies issued by this broker are issued with an effective time which is earlier than the time at which the coverage is effected. This means that every policy of insurance issued by this broker could potentially be challenged by Canadian General whenever an accident occurs on the same date that coverage is effected. 8 The case was argued on the basis of rectification. Both counsel relied on the case of Branchaud 9 and Co-operators and agreed that I had the requisite equitable jurisdiction to rectify the insurance policy. Rectification is an equitable remedy granted in instances of mutual mistake, and rarely on the basis of unilateral mistake. I am not persuaded that the programming of a computer system to generate policies with a standardized inception time of 12:01 a.m. constitutes a mutual or a unilateral mistake as the terms are generally understood. Rather, a decision was made to standardize the effective inception time at 12:01 a.m. In addition, a decision was made to employ some aspects of modern technology, presumably for speed and convenience, without concomitant safeguards, such as the ability to issue certificates which reflect the actual time at which coverage is effected, manually, by typewriter, or a computer override. I conclude that an equitable remedy should not be granted in these circumstances. Although I have concluded that the 12:01 time setting was not a mistake which could support a claim for rectification, I will also make findings with respect to the time at which coverage was effected. 8 Query whether this back timing would be considered backdating within the meaning of section 6(2) of the Compulsory Automobile Insurance Act. 9 (OIC P , May 2, 1997) 9

10 The telephone calls The Applicant s son, Anixar Mariona, aged 27, testified that on July 16, 1995, late in the evening before the accident, he learned during a telephone conversation that he would have to be at court the following morning by 9:00 a.m., to make arrangements to post bail for someone. The identity of that person was not disclosed to me and I infer that the person was a relative of Anixar Mariona. Apparently, Anixar would need to drive a car, leaving early the next day, to travel out of town in order to arrive at court on time. Anixar Mariona testified that he owned a 1984 red Scirocco, which he had purchased in December He had insured that car in the past with another insurer, but cancelled that policy in the spring of 1995 because of the cost and because that insurer debited an incorrect amount from his bank account for his insurance premium. Anixar Mariona s wife had her own vehicle which was insured with Scottish &York. Anixar Mariona was a listed driver on that policy, and he decided to obtain coverage for his Scirocco vehicle for the day, from Scottish & York, by adding the vehicle to his wife s policy. Anixar Mariona testified that on July 17, 1995, at approximately 6:00 a.m., he called the telephone number listed on the back of his wife s insurance documents. According to him, that document stated that the number could be called 24 hours a day, 6 days a week. He testified that he was then referred to a second telephone number, an emergency number, which he called. A copy of the document showing the emergency number was not filed as an exhibit. Anixar testified that he spoke to a woman about having his car insured for an emergency. He explained his emergency to her why he needed to drive his car. Anixar testified that he gave her the policy number, particulars of the car registration, a description of the car and all the information she requested. She stated that she would allow him to drive the car, would leave a message in the computer to this effect, and that he should call back later that day. Anixar Mariona 10

11 relies on this telephone conversation as having effected coverage on his vehicle from 6:00 a.m. on July 17, Anixar Mariona testified that he did not write down the name of the person with whom he spoke; he did not think of doing so at that time. In cross-examination, Anixar stated that he could not remember whether there had been any discussion during that telephone call about the duration of coverage or the cost of the premium. His intention had been to secure insurance so that he could drive the car for the day, regardless of the cost. While driving that day, he reflected on the convenience of again having the use of his car, and thought about insuring his car for a longer period. Anixar Mariona testified that he telephoned the insurer following the accident. He testified that he could not remember the name of the person with whom he spoke on this occasion either. He summarized their discussion as follows: They spoke about the premium. She told me the price. I told her about the car accident. She would send the paper in the mail. When she inquired about his injuries, Anixar stated that he told her I just feeled light. He did not ask whether potential claims from the accident would be honoured under the policy. He testified that he had coverage under his wife s policy. He believed at the time that he would be able to return to his job as a grower in a greenhouse the following day. The woman with whom he spoke asked him to provide a copy of the accident report, and he later sent this in. He received a pink 10 slip in the mail which showed that he had coverage from 12:01 a.m. on July 17, He testified that he does not remember being told that coverage would come into effect only at 5:00 p.m. on July 17, Ms. Knibbs testified that on July 17, 1995, at 6:00 a.m, when Anixar Mariona stated that he called, there would have been no one on duty with the requisite authority to effect coverage. Ms. Knibbs testified that had Anixar Mariona called at 6:00 a.m., he would have received a recorded 10 Tab 7, Applicant s Arbitration Brief, volume 4. 11

12 message informing him of the broker s hours of operation, and an emergency number which he could call if he were reporting a claim. Ms. Knibbs testified that she was the person with whom Anixar Mariona spoke when he called following the accident at approximately 4:55 p.m. She testified that he called to add a vehicle to his wife s policy. The broker had the necessary underwriting information on file because Anixar 11 was a listed insured on his wife s policy. Once this was done, he reported the accident. Ms. Knibbs notes of July 17, 1995, state that the Scirocco was added as of 5:00 p.m. She testified that she communicated this to Anixar Mariona. As noted earlier, Anixar testified that he did not recall this. Ms. Knibbs computer notes suggest that Anixar s response to this statement was to inform her of his earlier telephone calls that morning. According to Ms. Knibbs, Anixar s main concern was that he would be charged with driving without insurance. She testified that she was definite with him that there was nothing she could do to assist him in this regard. Findings By definition, insurance covers a loss which may occur in the future; not one which has already occurred. If coverage was effected following the accident, then the Applicant would not have coverage under this policy. I found Anixar Mariona s testimony with respect to the first telephone calls made at 6:00 a.m. credible. In reaching this finding, I have considered that Anixar Mariona has a personal interest in alleging that he was insured. I believe that he made the two telephone calls at approximately 6:00 a.m. on July 17, 1995, and that he received the advice which he testified he received. He relied on that advice and acted on it. 11 Statement of Ms. Knibbs Prior memoes [sic] showed that we had confirmed his prior insurance information. Those memos were not filed as exhibits, and Ms. Knibbs was not asked whether they included a memo from a computer entry following Anixar Mariona s 6:00 a.m. telephone calls. 12

13 During his testimony Anixar Mariona appeared to be reliving the events which took place on July 16 and 17, His anxiety, and at times embarrassment, with respect to the need for his attendance at a relative s bail hearing were evident. I do not place much weight on his inability to recall the names of the persons with whom he spoke during the telephone calls at 6:00 a.m. or at 4:55 p.m. on July 17, I find Anixar Mariona s allegation that he was told that he could drive the car plausible in the circumstances of this case. His spouse was an existing policy holder, and he was a listed insured in relation to that policy which had been written by that broker. He was not a stranger. The information which he states he was asked to provide that morning is the sort of information which might reasonably be requested in such circumstances. Anixar Mariona s testimony with respect to the particulars of the second telephone call are quite specific. Given the amount of detail it is not likely that he made up this call. His testimony, which I accept, indicates that the person with whom he spoke was receptive to dealing with broader emergencies than claims reporting. I find it plausible that an employee receiving such a call who wished to provide good customer service to an existing insured could make the type of representation that Anixar Mariona alleged. I accept that the person with whom Anixar Mariona spoke that morning may not have had actual authority to effect coverage on the vehicle; however, in my view, the question is one of ostensible authority. The circumstances of this case did not suggest that Anixar was prepared to take a chance and drive his car without insurance. Had he been informed that he could not be provided with coverage, Anixar had other alternatives. He could have borrowed his wife s car with her consent. Anixar Mariona testified that he could not recall whether the duration of the coverage or the cost of the premium had been discussed during the morning telephone calls. Both terms are capable of being ascertained. Since he was adding a vehicle to the policy, the usual and ordinary transaction 13

14 12 would be to add his vehicle on the same terms contained in the existing policy. The cost of the premium would be determined by the rates which Scottish & York filed with the Ontario Insurance Commission. Those rates are subject to regulation and approval. The Insurer could not have demanded a special rate; nor could Anixar Mariona have bargained for the rate he would be charged. There was no exploration in the evidence as to why Mr. Mariona was required to call back later that day. Ms. Knibbs testified that when she spoke with Mr. Mariona and learned of the accident, she told him that coverage would only be effective as of 5:00 p.m. that afternoon. Mr. Mariona testified that he did not recall such a statement being made to him. I find it probable that Ms. Knibbs did make such a statement when she was told of the accident. Ms. Knibbs notes also suggest Anixar s response was to inform her of his telephone calls earlier that morning. However, this conversation does not nullify the agreement made earlier that day. I conclude that the Applicant has established that coverage was in effect under the policy at the time of the accident. Expenses No request was made to me for expenses at this stage of the proceeding. The expenses of this preliminary motion will be in the discretion of the hearing arbitrator. Order: 1. Coverage is available to Mr. Mauricio Mariona under a policy of insurance A PLA. 12 Nevertheless, had Mr. Mariona wished to secure coverage for the day, he could have done so. Even if this duration had been refused by the insurer, statutory condition 11(2) contained in O. Reg. 777/93 permits Mr. Mariona to unilaterally terminate the contract subject to payment of the minimum retained premium. 14

15 2. Mr. Mariona s entitlement to various statutory accident benefits, interest, a special award and expenses may proceed to a hearing, scheduled for November 30, The expenses of this motion are in the discretion of the hearing arbitrator. September 25, 1998 Suesan Alves Arbitrator Date 15

16 Appendix Hearing: The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on January 28, 1998, before me, Suesan Alves, Arbitrator. Written submissions were received from counsel by February 10, Present at the Hearing: Applicant: Mr. Mariona s Representative: Canadian General s Representative: Mauricio Mariona Kevin Doan Barrister and Solicitor A. Wayne Edwards Barrister and Solicitor Ms. Liliana Chocarro of Omnicom interpreted in Spanish and English. The proceedings were transcribed by Ms. Kathy Green of Professional Court Reporters. Witnesses: Wendy Knibbs and Anixar Alexander Mariona Exhibits: Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Only Tabs 8, 11 and 12, of the Insurer s Document Brief, Only Tabs 4, 7, 11, 15 and 20 of the Applicant s Arbitration Brief, vol.4 Letter dated April 23, 1996 from Canadian General to Juan Carranza Letter at Tab 7 of Volume 3 of the Applicant s Arbitration Brief Letter at Tab 15 of Volume 3 of the Applicant s Arbitration Brief Other documents before the Arbitrator: Pre-hearing letter Agreement regarding production of documents 16