



COURT OF APPEAL FOR ONTARIO

CITATION: State Farm Mutual Automobile Insurance Company v.

Old Republic Insurance Company of Canada, 2015 ONCA 699

DATE: 20151020

DOCKET: C59786

Simmons, Gillese and Rouleau JJ.A.

BETWEEN

State Farm Mutual Automobile Insurance Company

Applicant (Respondent)

and

Old Republic Insurance Company of Canada

Respondent (Appellant)

Kadey B.J. Schultz and Jason R. Frost, for the appellant

Daniel Strigberger, for the respondent

Heard: April 28, 2015

On appeal from the order of Justice Paul Perell of the
Superior Court of Justice, dated June 25, 2014, with reasons reported at 2014
ONSC 3887, 120 O.R. (3d) 740 dismissing an appeal from the decision of
Arbitrator Shari L. Novick dated November 2, 2012, with reasons reported at (2012),
17 C.C.L.I. (5th) 156.

Simmons
J.A.:

A.

INTRODUCTION

[1]

The issue on appeal is whether Old Republic Insurance Company of Canada
must indemnify State Farm Mutual Automobile Insurance Company for statutory
accident benefits (SABs) paid by State Farm.

[2]

The issue turns on the proper interpretation of s. 275 of the
Insurance Act
, R.S.O. 1990, c. I-8, (the Act) and related regulations
(the Loss Transfer provisions) that require certain classes of insurers to
indemnify certain other classes of insurers for SABs payments made in limited
circumstances.
[1]
The full text of the relevant provisions is included as an appendix to these
reasons.

[3]

The relevant facts are not in dispute. In November 2007, a Pepsi truck
rear-ended a Dodge stopped near an intersection in Mississauga. The impact of
this collision caused the Dodge to rear-end a Nissan, also stopped near the
intersection. All of the automobiles
[2]
were travelling in the same direction and in the same lane.

[4]

The Pepsi truck was insured by Old Republic. The Nissan was insured by
State Farm. The driver of the Nissan was injured in the accident and collected
SABs from State Farm, the insurer required to pay the benefits under s. 268 of
the Act. State Farm, in turn, claimed indemnification from Old Republic for the
SABs payments under the Loss Transfer provisions of the Act.

[5]

Section 275 of the Act and a related regulation provide that an
automobile insurer that pays SABs is entitled, in certain circumstances, to
indemnification from the insurer of a heavy commercial vehicle where a heavy
commercial vehicle was involved in the incident from which the obligation to
pay SABs arose.

[6]

Under s. 275(2) of the Act, indemnification is made according to the
respective degree of fault of each insurers insured as determined under the
fault determination rules.

[7]

Old Republic does not dispute that the Pepsi truck was a heavy
commercial vehicle as defined under the regulations. Nor does it dispute that
the Pepsi truck was involved in the incident from which the obligation to pay
SABs arose. However, Old Republic does dispute that it is at fault in relation
to the Nissan under the fault determination rules (the FDRs).

[8]

The FDRs are set out in R.R.O. 1990, Reg. 668. The insurers agree that
s. 9(4) of the FDRs applies to this case.

[9]

Section 9 of the FDRs applies with respect to an incident involving
three or more automobiles that are travelling in the same direction and in the
same lane (a chain reaction): s. 9(1).

[10]

Section
9(2) of the FDRs requires that [t]he degree of fault for each collision
between two automobiles involved in the chain reaction [be] determined without
reference to any related collisions involving either of the automobiles and
another automobile.

[11]

Section
9(4) addresses a chain reaction where only the rear vehicle is in motion when
the incident occurs. Section 9(4) includes an illustrative diagram and states:

9. (4) If only automobile "C" is in motion when the
incident occurs,

(a) in the collision between automobiles "A" and
"B", neither driver is at fault for the incident; and

(b) in the collision between automobiles "B" and
"C", the driver of automobile "B" is not at fault and the
driver of automobile "C" is 100 per cent at fault for the incident.


[12]

The
matter proceeded to arbitration by way of an Agreed Statement of Facts. Before
the arbitrator, the insurers relied on conflicting decisions from the Superior
Court concerning whether s. 9(4) means the rear automobile is at fault for the
entire chain reaction or only for the collision with the automobile that it
rear-ended.

[13]

The
arbitrator held that, under s. 9(4) of the FDRs, the Pepsi truck is 100 per
cent responsible for the incident  meaning the chain reaction  and that its
insurer, Old Republic, therefore must indemnify State Farm for 100 per cent of
the SABs payments State Farm made. The Superior Court appeal judge upheld the
arbitrators decision.

[14]

Old
Republic appeals to this court, with leave.

[15]

For
the reasons that follow, I would allow the appeal. Reading s. 9(4) in the
context of the FDRs and the Loss Transfer provisions as a whole, I conclude
that the Pepsi truck is 100 per cent at fault only for the collision between it
and the Dodge.

B.

the agreed statement of facts

[16]

The
essential elements of the Agreed Statement of Facts, which formed the basis for
the arbitration, are as follows:

·

On November 8, 2007, there was a multi-vehicle accident at the
intersection of Mavis Road and Eglinton Avenue in Mississauga.

·

Vehicle 1 in the accident was a Pepsi truck insured by Old
Republic.

·

Vehicle 2 in the accident was a Dodge insured by The Dominion of
Canada General Insurance Company.

·

Vehicle 3 in the accident was a Nissan insured by State Farm.

·

At the time of the accident, all three vehicles were travelling
in the same direction in the same lane.

·

The accident occurred when vehicle 1 rear-ended vehicle 2,
causing vehicle 2 to rear-end vehicle 3. At the time of the collision between
vehicle 1 and vehicle 2, vehicles 2 and 3 were stopped. There was never any
contact between vehicle 1 and vehicle 3.

·

State Farm paid the driver of vehicle 3 SABs benefits under s.
268 of the Act.

·

Vehicle 1 is a heavy commercial vehicle. Old Republic is a second
party insurer under s. 9 of R.R.O. 1990, Reg. 664.

C.

loss transfer provisions  SABS

[17]

Section
275(1) of the Act and the provisions of a related regulation provide that an
automobile insurer that pays SABs (a first party insurer
[3]
)
is entitled, in certain circumstances, to indemnification from the insurer of a
heavy commercial vehicle that was involved in the incident from which the
obligation to pay SABs arose.

[18]

Section
275 (1) reads as follows:

275. (1)
The insurer responsible
under subsection 268 (2)
for the
payment of statutory accident benefits
to such classes of
persons as may be named in the regulations
is
entitled
, subject to such terms, conditions, provisions,
exclusions and limits as may be prescribed,
to
indemnification
in relation to such benefits paid by it
from the insurers of such class or classes of automobiles
as may be named in the regulations
involved
in the incident from which the responsibility to pay the statutory accident
benefits arose.
[Emphasis added.]

[19]

Section
9 of Reg. 664 specifies the insurers of which classes of automobiles are
required to provide indemnification under s. 275 of the Act to the insurers of
which other classes of automobiles.

[20]

Section
9 requires insurers of heavy commercial vehicles to indemnify first party
insurers (the insurer required to pay SABs) unless the person receiving SABs is
claiming them under a policy insuring a heavy commercial vehicle.

[21]

Notably,
s. 9 also provides for indemnification of insurers of motorcycles, off-road
vehicles and motorized snow vehicles by other classes of vehicles in certain
circumstances.

[22]

The
relevant provisions of s. 9 of Reg. 664, titled Indemnification for Statutory
Accident Benefits (Section 275 of the Act) read as follows:

9. (1) In this section,

"first party insurer" means the insurer responsible
under subsection 268 (2) of the Act for the payment of statutory accident
benefits;

"heavy commercial vehicle" means a commercial vehicle
with a gross vehicle weight greater than 4,500 kilograms;

"motorcycle" means a self-propelled vehicle with a
seat or saddle for the use of the driver, steered by handlebars and designed to
travel on not more than three wheels in contact with the ground, and includes a
motor scooter and a motor assisted bicycle as defined in the
Highway
Traffic Act
;

"motorized snow vehicle" means a motorized snow
vehicle as defined in the
Motorized Snow Vehicles Act
;

"off-road vehicle" means an off-road vehicle as
defined in the
Off-Road Vehicles Act
;

"second party insurer" means an insurer required
under section 275 of the Act to indemnify the first party insurer.

(2) A second party insurer under a policy insuring any class of
automobile other than motorcycles, off-road vehicles and motorized snow
vehicles is obligated under section 275 of the Act to indemnify a first party
insurer,

(a) if the person receiving statutory accident benefits from
the first party insurer is claiming them under a policy insuring a motorcycle
and,

(i) if the motorcycle was involved in the incident out of
which the responsibility to pay statutory accident benefits arises, or

(ii) if motorcycles and motorized snow vehicles are the only
types of vehicle insured under the policy; or

(b) if the person receiving statutory accident benefits from
the first party insurer is claiming them under a policy insuring a motorized
snow vehicle and,

(i) if the motorized snow vehicle was involved in the
incident out of which the responsibility to pay statutory accident benefits
arises, or

(ii) if motorcycles and motorized snow vehicles are the   only
types of vehicle insured under the policy.

(3) A second party insurer under a policy insuring a heavy
commercial vehicle is obligated under section 275 of the Act to indemnify a
first party insurer unless the person receiving statutory accident benefits
from the first party insurer is claiming them under a policy insuring a heavy
commercial vehicle.

[23]

Section
275(2) of the Act addresses the extent of the indemnification and how it is
determined:

275. (2) Indemnification under
subsection (1) shall be made
according to the
respective degree of fault of each insurers insured as determined under the
fault determination rules.
[Emphasis added.]

[24]

I
pause to observe that the SABs Loss Transfer provisions do not provide for
indemnification for SABs payments based on fault for all accidents. Rather,
they provide for indemnification between specified  and strictly limited 
classes of vehicles in certain circumstances.

[25]

Thus,
the Loss Transfer provisions shift the financial burden of first party SABs
payments to insurers of heavy commercial vehicles from other classes of
automobiles in certain circumstances where one or more heavy commercial vehicles
is involved in an incident. In certain circumstances, they also shift the
financial burden of first party SABs payments from insurers insuring
motorcycles, off-road vehicles and motorized snow vehicles to insurers of other
classes of automobiles.

[26]

The
rationale for this limited indemnification was explained in interpretation
bulletins issued by the former Ontario Insurance Commission (now the Financial
Services Commission of Ontario) shortly after the partial no-fault scheme of
insurance was introduced in Ontario in 1990. In brief, it is intended to
balance the costs of moving away from a tort-based system of compensation for
people injured in motor vehicle accidents to a partial no-fault system of
compensation between insurers of different classes of vehicles.

[27]

Bulletin
A-9/92 explains loss transfer as follows:

Loss transfer is a mechanism by which, under certain
circumstances, automobile insurers who pay no-fault benefits (the first-party
insurer) may be reimbursed by another insurer (the second-party insurer) for
all or part of a claim.

Loss transfer only operates between insurers of different
classes of vehicles  and only applies when the policyholder of the
second-party insurer was at least partly at fault in an accident.
The purpose of loss transfer is to balance the cost of no-fault
benefits

between different classes of
vehicles.
[Emphasis added.]

[28]

Bulletin
A-11/94 points out that there is no right of subrogation for SABs and explains
in more detail the rationale for loss transfer:

Since June, 1990, insureds look to their own insurers for
accident benefits instead of seeking compensation from third parties. Certain
types of vehicles that might have been less likely to experience bodily injury
claims under a tort-based compensation system are more likely to require
accident benefits payments for such claims under a no-fault system. Loss
Transfer balances the cost of providing compensation on a first party basis
between these specified classes of vehicles. For example, loss transfer shifts
costs from insurers insuring motorcycles to insurers of other classes of
automobiles under certain circumstances. Loss transfer also shifts costs to
insurers of heavy commercial vehicles from other classes of automobiles under
certain circumstances.

D.

the fault determination rules (FDRS)

(1)

Purpose of the FDRs

[29]

The
FDRs are set out in R.R.O. 1990, Reg. 668. As I have said, whether Old Republic
is required to indemnify State Farm turns on the proper interpretation of the
Loss Transfer provisions, which include the FDRs. To interpret the FDRs, it is
necessary to understand the purposes they serve under the Act.

[30]

According
to Allan ODonnell in
Automobile Insurance in Ontario
,
(Markham: Butterworths Canada Limited, 1991) at pp. 56-58,
and as becomes apparent from an examination of the Act, the FDRs serve two
purposes.

[31]

First,
the FDRs determine an insureds degree of fault for the purpose of establishing
the insureds entitlement to direct compensation from the insureds own insurer
for property damage to the insureds automobile caused by the driver of another
automobile.

[32]

Where
damage to an insureds automobile has been caused by the fault of the driver of
another insured automobile, the insureds own insurer compensates the insured
for the damage to the insureds automobile (including contents damage and loss
of use) under the third-party liability section of the insurance policy to the
extent the insured was not at fault for the accident.

[33]

Section 263(3) of the Act provides that [r]ecovery under subsection
(2) [for property damage] shall be based on the degree of fault of the
insurers insured as determined under the fault determination rules.

[34]

Accordingly,
even where an insured has not purchased optional collision coverage, an insured
may recover against her own insurer for damage to her automobile to the extent
that the insured was not at fault for the accident as determined under the
FDRs.

[35]

Mr.
ODonnell explains, at p. 56, that the FDRs are  [skewed] somewhat in favour
of policyholders seeking to maximize their own insurers contribution to
automobile repair costs in two ways. One way is that, under s. 3 of the FDRs, the
degree of fault is determined without reference to, among other things, weather
conditions, road conditions and visibility.

[36]

Another
way is that, under s. 4 of the FDRs, if more than one FDR applies, the one that
attributes the least degree of fault to an insured is applied. Mr. ODonnell
notes, at p. 57: the FDRs under direct compensation can in a two automobile
accident allow
each
insured to recover 100 per cent of their
respective automobile damage (emphasis in original).
[4]

[37]

Further,
while insurers are bound by the FDRs, insureds are not. Thus an insured may sue
her insurer for direct compensation for property damage claims if she is
unhappy with the result produced by the FDRs.

[38]

The
second purpose of the FDRs relates to Loss Transfer. Loss Transfer is available
in certain circumstances in relation to SABs. It is also available in very
limited circumstances in relation to direct compensation for property damage
and collision coverage. As I have explained, Loss Transfer allows one insurer
to obtain indemnification from another insurer for payments made to an insured.

[39]

In
relation to SABs, Loss Transfer
is made according to the
respective degree of fault of each insurers insured as determined under the
FDRs: s. 275(2) of the Act.

(2)

Relevant Provisions
of the FDRs in addition to s. 9

[40]

In
addition to s. 9, several other provisions of the FDRs are relevant for the
purposes of this appeal.

[41]

Sections
1 to 5 of the FDRs address general matters. Of these provisions, ss. 2, 3 and 5
are relevant to this appeal.

[42]

Section
2(1) requires that an insurer determine the degree of fault of its insured in
accordance with the FDRs:

2. (1) An insurer shall determine the degree of fault of its
insured for loss or damage arising directly or indirectly from the use or
operation of an automobile in accordance with these rules.

[43]

Section
2(2) provides that the diagrams in this Regulation are merely illustrative of
the situations described in these rules.

[44]

Section
3 stipulates that the degree of fault of an insured is determined without
reference to road conditions and other factors:

3. The degree of fault of an insured is determined without
reference to,

(a) the circumstances in which the incident occurs, including
weather conditions, road conditions, visibility or the actions of pedestrians;
or

(b) the location on the insured's automobile of the point of
contact with any other automobile involved in the incident.

[45]

Section
5 requires that an insureds degree of fault be determined in accordance with
the ordinary rules of law if an incident is not described in the FDRs or if
there is insufficient information to determine the insureds degree of fault:

5. (1) If an incident is not described in any of these rules,
the degree of fault of the insured shall be determined in accordance with the
ordinary rules of law.

(2) If there is insufficient information concerning an incident
to determine the degree of fault of the insured, it shall be determined in
accordance with the ordinary rules of law unless otherwise required by these
rules.

[46]

Sections
6 to 9 provide rules for automobiles travelling in the same direction and lane.
Sections 6, 7 and 8 all describe two-automobile accidents.

[47]

Sections
10 and 11 provide rules for automobiles travelling in the same direction and
adjacent lanes. Apart from s. 9, s. 11 is the only section in the FDRs that
specifically addresses an incident involving three or more automobiles. It
addresses a pile-up:

11. (1) This section applies with respect to an incident
involving three or more automobiles that are travelling in the same direction
and in adjacent lanes (a "pile-up").

(2) For each collision between two automobiles involved in the
pile-up, the driver of each automobile is 50 per cent at fault for the
incident.


(3)

Section 9

[48]

As
s. 9 is central to this appeal, I will reproduce it in full:

RULES FOR AUTOMOBILES TRAVELLING IN THE SAME DIRECTIONS AND
LANE



9. (1) This section applies with respect to an incident
involving three or more automobiles that are travelling in the same direction
and in the same lane (a "chain reaction").

(2) The degree of fault for each collision between two
automobiles involved in the chain reaction is determined without reference to
any related collisions involving either of the automobiles and another
automobile.



(3) If all automobiles involved in the incident are in motion
and automobile "A" is the leading vehicle, automobile "B" is
second and automobile "C" is the third vehicle,

(a) in the collision between automobiles "A" and
"B", the driver of automobile "A" is not at fault and the
driver of automobile "B" is 50 per cent at fault for the incident;

(b) in the collision between automobiles "B" and
"C", the driver of automobile "B" is not at fault and the
driver of automobile "C" is 100 per cent at fault for the incident.






(4) If only automobile "C" is in motion when the
incident occurs,

(a) in the collision between automobiles "A" and
"B", neither driver is at fault for the incident; and

(b) in the collision between automobiles "B" and
"C", the driver of automobile "B" is not at fault and the
driver of automobile "C" is 100 per cent at fault for the incident.






(4)

Applying the FDRs

[49]

This
court has held that the loss transfer regime is meant to provide an expedient
and summary method of reimbursement. As such, fault is to be determined
strictly in accordance with the FDRs
.
As

Griffiths J.A.
explained in
Jevco Insurance Co. v. Canadian General Insurance Co.
, (1993),
14 O.R. (3d) 545, at p. 545:

The scheme of the legislation, under s. 275 of the
Insurance
Act
and companion regulations, is to provide for an expedient and summary
method of reimbursing the first-party insurer for payment of no-fault benefits
from the second-party insurer whose insured was fully or partially at fault for
the accident. The fault of the insured is to be determined strictly in
accordance with the fault determination rules, prescribed by regulation, and any
determination of fault in litigation between the injured plaintiff and the
alleged tortfeasor is irrelevant.

[50]

Similarly,
in
Jevco Insurance Co. v. York Fire & Casualty Co.
, (1996), 27
O.R. (3d) 483, at p. 486, this court held that the purpose of the legislation
is to spread the load among insurers in a gross and somewhat arbitrary fashion,
favouring expedition and economy over finite exactitude.

And in
Jevco
Insurance Co. v. Halifax Insurance Co.
,
(
1994), 27 C.C.L.I. (2d)
64 (C.J.) at para. 7, Matlow J. observed that the FDRs are meant to facilitate
indemnification and that they allocate fault in a manner that is usually, but
not always, consistent with actual fault:

[The Fault Determination Rules] set out a series of general
types of accidents and, to facilitate indemnification without the necessity of
allocating actual fault,
they allocate fault according to
the type of a particular accident in a manner that, in most cases, would
probably but not necessarily correspond with actual fault.

[Emphasis added.]



E.

The Conflicting Superior Court decisions

[51]

In
the proceedings before the arbitrator and on appeal to the Superior Court, the
insurers relied on conflicting Superior Court decisions relating to the proper
interpretation of s. 9(4) of the FDRs in support of their respective positions.

[52]

Old
Republic relied on
GAN General Insurance Co. v. State Farm Mutual Insurance
Co.
(1999), 19 C.C.L.I. (3d) 266 (Ont. S.C.) (
GAN
). In
GAN
,
a transport truck set off a chain reaction collision and State Farm, the
insurer of the third automobile in line, sought indemnification for SABs
payments under s. 9(4), or ss. 6(1) and (2), of the FDRs. Following an
arbitration hearing, the arbitrator held that s. 9(4) of the FDRs does not
apply to determine the fault of the rear automobile in a chain reaction
accident for collisions between automobiles with which the rear car did not
directly collide. Rather, under s. 5(1) of the FDRs, the ordinary rules of law
apply.

[53]

On
appeal to the Superior Court, Pitt J. rejected that conclusion. He found, based
on s. 9(2) of the FDRs, that in relation to chain reaction incidents, the
legislature had decided not to apportion liability between automobiles that do
not collide. He explained, at paras. 17-19:

I conclude that the Arbitrator made an error of law in his
interpretation of Rule 9 and that it did apply to the fact situation before
him, by virtue of s. 9(2).



Section 9(2) means simply that in determining the degree of
fault between two colliding automobiles, i.e. A and B or B and C, no
attention is going to be given to the role of car C in the former case or car
A in the latter case. Put another way, the formula established for
apportioning fault between the directly colliding cars has no application to
cars which are involved in the same chain collision but did not collide with
each other. In the result, as between car C and A, which have not collided
with each other, the Legislature has decided that no apportionment of liability
is to be made as between these two cars.



Due to the combined effect of section 9(4) and (2), and because
s. 5 in not applicable, there is simply no apportionment between car C and
A.



[54]

State
Farm relied on
Royal & SunAlliance Insurance Co. of Canada v. AXA
Insurance (Canada)
, 2012 ONSC 3095, [2012] I.L.R. I-5299 (
Royal
),
in which Chapnik J. came to a different conclusion. In
Royal
, an
arbitrator found that a truck had initiated a chain reaction collision, and
that, following the initial impact between the truck and a stopped vehicle, the
truck also struck the third vehicle in line. The insurer of the third vehicle
claimed indemnification for SABs from the trucks insurer.

[55]

The
arbitrator rejected the submission that s. 11 of the FDRs, dealing with
pile-ups, should apply. Rather, he concluded that s. 9(4), dealing with chain
reaction collisions, was the appropriate section to apply. The arbitrator found
the case was distinguishable on its facts from
GAN
. In any event, he
adopted the reasoning in other decisions to hold that the absence of contact
between vehicles is but one factor to consider in analysing whether a loss
transfer applies. He concluded that, under s. 9(4), the truck was 100 per cent
responsible for the chain reaction because it was the only moving vehicle in
the lane when the accident occurred.

[56]

On
appeal to the Superior Court, Chapnik J. upheld the arbitrators conclusions.
She explained, at paras. 30-33:

The factual circumstances here support the application of Rule
9(4), even if the subject automobiles did not collide with each other. It is
common ground that all three subject automobiles were in the centre southbound
lane at the time of the impact. Pursuant to Rule 9(4) if only the last vehicle
is in motion at the impact, that vehicle is 100% at fault for the collision.



In my view, the arbitrator applied Rule 9(4) correctly.



Moreover, I agree with the submission of the respondent that to
leave the insurer of a passenger vehicle without recourse to a loss transfer
despite a finding that a heavy commercial vehicle is 100% at fault for the damages
sustained by it, would be contrary to the legislations intention.





[T]he
Fault Determination Rules
hold that the truck is
100% at fault for the collision involving the Jones and the AXA automobile. In
my view, the arbitrator was correct in finding that AXA is entitled to
indemnification based on the apportionment of fault to the Royal truck for the
collision.

F.

the arbitrators decision

[57]

The
arbitrator in this case preferred the approach adopted by Chapnik J. over that
of Pitt J
.
She rejected the proposition that the combined effect of ss.
9(4) and 9(2) results in no apportionment of liability between two vehicles
that do not collide. In her view, s. 9(2) simply states that when determining
the degree of fault between automobiles that collide, no reference should be
made to any collisions that one of those vehicles may have had with another
vehicle: at para. 32. She found that s. 9(2) was helpful in interpreting s.
9(3), but not s. 9(4). At paras. 32-33 of her decision, she wrote:

After much consideration of the issue, I have concluded that [
Royal
]
is correct. In my view, Rule 9(2) does not go as far as counsel for Old
Republic suggests, or Justice Pitt asserts in the GAN decision. It simply
states that when determining the degree of fault between automobiles that
collide, no reference should be made to any collisions that one of those
vehicles may have had with another vehicle.
That
direction is instructive with respect to Rule 9(3), which applies in
circumstances in which all three vehicles involved in a chain reaction
collision are in motion. That rule dictates that as between the front and
middle vehicles that collide, each are 50 per cent at fault for the incident
[5]
, and as between the middle
vehicle and the rear vehicle, the rear vehicle is 100 per cent at fault. Given
the above, it only makes sense that each collision is to be considered
separately, and that the driver of the middle vehicle is both 50 per cent at
fault for one collision and bears no fault at all for another.
Rules
9(2) and 9(3) weave together well in that sense, and result in a separate
analysis being applied for each collision between two vehicles in order to
determine fault.



Conversely, Rule 9(2) does not really
assist in interpreting and applying Rule 9(4). In my view, to say that the
language in 9(2) directs that fault is only to be apportioned between two
vehicles if they directly collide is to stretch the meaning of its words well
beyond their clear meaning
.

[Emphasis added.]



[58]

She
found further support for this proposition in s. 275(2) of the
Insurance
Act,
which mandates that the respective degree of fault of each insurers
insured is to be determined under the FDRs. In her view, given that s. 9(4)(a)
indicates that the driver of the front vehicle is not at fault and s. 9(4)(b)
says that the driver of the vehicle at the rear of the chain is 100 per cent at
fault, the driver of the front vehicle is entitled to indemnification from the
driver of the rear vehicle. This is so even though these vehicles did not
collide.

[59]

Finally,
the arbitrator noted the underlying intention of the loss transfer provisions
to balance the costs of providing first party compensation between specified
classes of vehicles. She concluded it would be inconsistent with that intention
to find that the insurer of the front vehicle cannot seek indemnification from
the truck that caused the damage and injury to its insured.

G.

the Superior Court appeal judges decision

[60]

The
Superior Court appeal judge also preferred the result in
Royal
. He
disagreed with Pitt J.s view in
GAN
that the application of s. 9(4)
is governed by s. 9(2). According to the Superior Court appeal judge, at para.
76, s. 9(2) is a rule about how to determine the degree of fault for each
collision in the chain reaction, but it does not provide a rule for the vehicle
that started the series of collisions. In other words, it does not follow
from Rule 9(2) that the Legislature has decided that no determination of
liability is to be made between vehicles involved in the same chain collision
but which do not directly collide.

[61]

The
Superior Court appeal judge found, at para. 85, that the plain meaning of Rule
9(4) is that if only automobile C is in motion when the incident occurs,
then automobile C is 100 per cent at fault for the incident. In his view,
incident means the entire chain reaction; thus, automobile C is responsible
for the entire chain reaction.

[62]

He
also found that Pitt J.s interpretation changes the meaning of Rule 9(4)
because it effectively replaces the word incident with collision so it
would read the driver of automobile C is 100 percent at fault for the
collision
. He explained, at para. 88: That
interpretation would indeed make the driver of automobile C only liable for
collisions but that is not what the Legislature said. The Legislature said
that the driver of automobile C is 100 per cent at fault for the incident.

[63]

He
concluded that the interpretation adopted by Chapnik J. in
Royal
was
consistent with the purpose of the legislative scheme, which is to impose risk
and liability on the relatively more dangerous and damage causing vehicle when
there is an incident: at para. 93.

[64]

The
Superior Court appeal judge rejected Old Republics argument that interpreting
the word incident in sub-clauses (a) and (c) of s. 9(4) to mean the entire
chain reaction would put at risk the economic viability of the no-fault
accident system by exposing insurers of heavy commercial vehicles to unlimited
liability for no fault benefits. He noted that that interpretation was
consistent with fault determination at common law. He also observed that there
was no empirical evidence that that interpretation would change the
underwriting risk of heavy commercial vehicles.

[65]

The
Superior Court appeal judge concluded that Old Republic is liable to indemnify State
Farm for the SABs paid to its insured and dismissed Old Republics appeal.

H.

analysis

[66]

The
issue on appeal is fundamentally one of statutory interpretation.

[67]

The
modern approach to statutory interpretation requires that the words of a
statute be read in their entire context and in their grammatical and ordinary
sense harmoniously with the scheme of the Act, the object of the Act, and the
intention of Parliament: see
Rizzo & Rizzo Shoes Ltd. (Re)
,
[1998] 1 S.C.R. 27 at para. 21, quoting from Elmer Driedger,
Construction
of Statutes
, 2nd ed. (Toronto: Butterworths, 1983) at 87.

[68]

The
rules governing statutory interpretation apply equally to regulations.
Importantly, a regulation must be read in the context of the enabling Act,
having regard to the purpose of the enabling provisions:
Bristol-Myers
Squibb Co. v. Canada (Attorney General),
2005 SCC 26, [2005] 1 S.C.R. 533,
at paras. 37-38.

[69]

The
difficult problem posed by this case is that the obvious interpretation of s.
9(4), when read in isolation, is that incident should retain the same meaning
in sub-clauses (a) and (b) as it carries in the main clause of s. 9(4)  and in
s. 9(1)  that is, incident refers to the chain reaction. The problem,
however, with that interpretation is that it does not appear to make sense when
applied to s. 9(3)  which is a parallel provision to s. 9(4).

[70]

Accordingly,
applying the modern rule of statutory interpretation to s. 9(4), I conclude
that the word incident as it appears in sub-clauses (a) and (b) of s. 9(4)
can refer only to the collision identified in the particular sub-clause  and
that it cannot reasonably refer to the entire chain reaction. I reach this
conclusion for six reasons.

[71]

First,
reading s. 9(4) in conjunction with s. 9(3) leads inevitably to this
conclusion. Otherwise, s. 9(3) could lead to over-indemnification of some
insurers in some circumstances. I repeat s. 9 for ease of reference:

RULES FOR AUTOMOBILES TRAVELLING IN THE SAME DIRECTIONS AND
LANE



9. (1) This section applies with respect to an incident
involving three or more automobiles that are travelling in the same direction
and in the same lane (a "chain reaction").

(2) The degree of fault for each collision between two
automobiles involved in the chain reaction is determined without reference to
any related collisions involving either of the automobiles and another
automobile.

(3) If all automobiles involved in the incident are in motion
and automobile "A" is the leading vehicle, automobile "B"
is second and automobile "C" is the third vehicle,

(a) in the collision between automobiles "A" and
"B", the driver of automobile "A" is not at fault and the
driver of automobile "B" is 50 per cent at fault for the incident;

(b) in the collision between automobiles "B" and
"C", the driver of automobile "B" is not at fault and the
driver of automobile "C" is 100 per cent at fault for the incident.






(4) If only automobile "C" is in motion when the
incident occurs,

(a) in the collision between automobiles "A" and
"B", neither driver is at fault for the incident; and

(b) in the collision between automobiles "B" and
"C", the driver of automobile "B" is not at fault and the
driver of automobile "C" is 100 per cent at fault for the incident.




[72]

Sections
9(3) and 9(4) are parallel provisions. Having regard to their parallel nature,
I am satisfied that these provisions must be read consistently.

[73]

Section
9(3) addresses a chain reaction in which all automobiles are in motion; s. 9(4)
addresses a chain reaction where only the rear automobile is in motion. Each
provision includes two sub-clauses: the first sub-clause addresses the
collision between the lead and middle vehicle; the second sub-clause addresses
the collision between the middle and rear vehicle. In the case of each
provision, the language used in each sub-clause is consistent with the language
used in the same sub-clause of the parallel provision.

[74]

Section
9(3) cannot reasonably be read as meaning that the rear automobile is 100 per
cent at fault for the entire chain reaction. If that were the case, depending
on the types of automobile involved in the accident, that would mean the first
party insurer of the lead vehicle could be entitled to be indemnified for 150
per cent of the SABs payments it made.

[75]

This
is because the first party insurer of the lead vehicle would be entitled to be
indemnified for 50 per cent of the SABs payments made by the second party
insurer of the middle vehicle and for 100 per cent of the SABs payments made by
the second party insurer of the rear vehicle.

[76]

A
similar result would ensue if both the middle and rear vehicles involved in the
chain reaction were heavy commercial vehicles.

[77]

In
my view, the legislature cannot have intended that one insurer would be
indemnified by other insurers for 150 per cent of SABs payments made. That
would be an absurd result.

[78]

This
leads to the conclusion that incident as it appears in sub-clauses (a) and
(b) of s. 9(3) can refer only to the collision identified in the particular
sub-clause. Because of the parallel nature of ss. 9(3) and (4), this supports
the conclusion that incident as it appears in sub-clauses (a) and (b) of s.
9(4) can refer only to the collision identified in the particular sub-clause.

[79]

Second,
s. 9(2) also supports the conclusion that incident as it appears in
sub-clauses (a) and (b) of ss. 9(3) and (4) can refer only to the collision
identified in the particular sub-clause.

[80]

Section
9(2) requires that the degree of fault for each collision between two
automobiles involved in the chain reaction [be] determined without reference to
any related collisions involving either of the automobiles and another
automobile. Immediately following s. 9(2), ss. 9(3) and (4) address, in
sub-clauses (a) and (b) of each provision, the responsibility of the drivers of
two automobiles for the collision between their two automobiles.

[81]

Considered
in the light of the direction in s. 9(2) to determine degree[s] of fault for
each collision between two automobiles involved in a chain reaction  without
reference to any related collisions, it makes no sense that when addressing a
collision between two automobiles in each of sub-clauses (a) and (b), the
legislature would also try to address the responsibility of a particular
automobile for the entire chain reaction.

[82]

Third,
s. 11 also supports the conclusion that incident as it appears in sub-clauses
(a) and (b) of ss. 9(3) and (4) can refer only to the collision identified in
the particular sub-clause.

[83]

As
indicated above, apart from s. 9, s. 11 is the only other provision of the FDRs
that addresses an incident involving more than two automobiles. I repeat s. 11
for ease of reference.

11. (1) This section applies with respect to an incident
involving three or more automobiles that are travelling in the same direction
and in adjacent lanes (a "pile-up").

(2) For each collision between two automobiles involved in the
pile-up, the driver of each automobile is 50 per cent at fault for the
incident.




[84]

Section
11(2) uses similar language to the language that appears in sub-clauses (a) and
(b) of ss. 9(3) and (4). Like s. 9(3), s. 11(2) would produce absurd results 
over-indemnification of a first party insurer  if incident as it appears in
that section were interpreted to mean the pile-up and if one or more of the
automobiles involved in the pile-up were entitled to indemnification under the
motorcycle Loss Transfer provisions or if multiple heavy commercial vehicles
were involved in the incident.

[85]

I
therefore conclude that incident as it appears in s. 11(2) refers to each
collision between two vehicles as those words appear in s. 11(2) and that it
does not refer to the entire pile-up. This supports interpreting s. 9(4) as I
have suggested. Incident as used in the FDRs means different things in
different contexts.

[86]

Fourth,
interpreting incident as it appears in sub-clauses (a) and (b) of s. 9(4) as
referring to the collision identified in each particular sub-clause is not
inconsistent with the purpose of SABs Loss Transfer provisions. Those
provisions are designed to balance the financial costs of SABs payments among
insurers of different classes of vehicles in a gross and somewhat arbitrary fashion,
favouring expedition and economy over finite exactitude.

[87]

Loss
transfer is not available generally to insurers in relation to SABs based on
fault. The fact that not all insurers required to pay SABs will be entitled to
indemnification from a heavy commercial vehicle involved in the incident
under s. 275(2) of the Act in every case does not make this interpretation of
s. 9(4) inconsistent with the purposes of the SABs Loss Transfer scheme.

[88]

Fifth,
interpreting incident as it appears in sub-clauses (a) and (b) of s. 9(4) of
the FDRs as referring to the collision identified in the particular sub-clause
sits comfortably with the use of the FDRs to determine direct compensation
claims for property damage. That is because recovery for direct compensation
claims is based on the degree of fault of an insurers insured as determined
under the FDRs. This interpretation will therefore have no impact on that use
of the FDRs.

[89]

Sixth,
interpreting incident as it appears in sub-clauses (a) and (b) of s. 9(4) as referring
to the collision identified in each particular sub-clause is not inconsistent
with the direct compensation for property damage claims Loss Transfer
provisions. This interpretation will have no impact on the garage or towing
loss transfer provisions because those provisions rely on the fault of the
garage operator or their employee or the driver of the automobile towing the
insured automobile.

[90]

As
for the Loss Transfer provisions relating to direct compensation for damage to
automobile contents greater than $20,000, those provisions operate in the same
fashion as the SABs Loss Transfer provisions. Just as it makes no sense that a
SABs first party insurer would be entitled to more than 100 per cent
indemnification for SABs payments, it makes no sense that an insurer who pays
out direct compensation for contents damage greater than $20,000 would be
entitled to more than 100 per cent indemnification for those payments.

[91]

Applying
the modern rule of statutory interpretation in this case, I conclude that the
word incident as it appears in sub-clauses (a) and (b) of s. 9(4) refers to
the collision identified in each sub-clause and not the entire chain reaction.

[92]

On
appeal to this court, Old Republic reiterated its argument that interpreting
incident as it appears in sub-clauses (a) and (b) of s. 9(4) to mean the
chain reaction would have dire consequences for the insurance, trucking and
heavy commercial vehicle industries. Like the Superior Court appeal judge, I
reject this argument as it was advanced on an
in terrorem
basis,
without an evidentiary foundation and without any assistance concerning the
technical aspects of this very technical area of the law.

I.

disposition

[93]

Based
on the foregoing reasons, I would allow the appeal, set aside the arbitrators
order and substitute an order providing that Old Republic is not required to
indemnify State Farm for SABs payments.

[94]

Costs
of the appeal and the motion for leave are to Old Republic on a partial
indemnity scale fixed in the amount of $14,000.00 inclusive of disbursements
and applicable taxes.

Released:





OCT 20 2015                                   Janet
Simmons J.A.

EEG                                                I
agree E.E. Gillese J.A.

I
agree Paul Rouleau J.A.





Appendix A





Insurance Act,
R.S.O. 1990, c. I.8



PART VI
AUTOMOBILE INSURANCE



Interpretation,
Part VI



224.

(1) In this Part,



"automobile" includes,



(a)

a motor vehicle required under any Act to be insured under a motor
vehicle liability policy, and



(b)

a vehicle prescribed by regulation to be an automobile;





"fault
determination rules" means the rules prescribed under paragraph 21 of
subsection 121 (1);


...



"insured"
means a person insured by a contract whether named or not and includes every
person who is entitled to statutory accident benefits under the contract
whether or not described therein as an insured person;




...



"statutory
accident benefits" means the benefits set out in the regulations made
under paragraphs 9 and 10 of subsection 121 (1);



"Statutory
Accident Benefits Schedule" means the regulations made under paragraphs 9
and 10 of subsection 121 (1).





...













DIRECT
COMPENSATION - PROPERTY DAMAGE



Accidents
involving two or more insured automobiles



263.

(1) This
section applies if,



(a)

an automobile or its contents, or both, suffers damage arising directly
or indirectly from the use or operation in Ontario of one or more other
automobiles;



(b)    the
automobile that suffers the damage or in respect of which the contents suffer
damage is insured under a contract evidenced by a motor vehicle liability policy
issued by an insurer that is licensed to undertake automobile insurance in
Ontario or that has filed with the Superintendent, in the form provided by the
Superintendent, an undertaking to be bound by this section; and



(c)    at
least one other automobile involved in the accident is insured under a contract
evidenced by a motor vehicle liability policy issued by an insurer that is
licensed to undertake automobile insurance in Ontario or that has filed with
the Superintendent, in the form provided by the Superintendent, an undertaking
to be bound by this section.

...



Damage
recovery from insured's insurer



(2)

If this section applies, an insured is entitled to recover for the
damages to the insured's automobile and its contents and for loss of use from
the insured's insurer under the coverage described in subsection 239 (1) as
though the insured were a third party.



Fault-based
recovery



(3)

Recovery under subsection (2) shall be based on the degree of fault of
the insurer's insured as determined under the fault determination rules.



Dispute
resolution



(4)

An insured may bring an action against the insurer if the insured is not
satisfied that the degree of fault established under the fault determination
rules accurately reflects the actual degree of fault or the insured is not
satisfied with a proposed settlement and the matters in issue shall be
determined in accordance with the ordinary rules of law.



Restrictions on other
recovery



(5)

If this section applies,



(a)

an insured has no right of action against any person involved in the
incident other than the insured's insurer for damages to the insured's
automobile or its contents or for loss of use;



(a.1)

an
insured has no right of action against a person under an agreement, other than
a contract of automobile insurance, in respect of damages to the insured's
automobile or its contents or loss of use, except to the extent that the person
is at fault or negligent in respect of those damages or that loss;



(b)

an insurer, except as permitted by the regulations, has no right of indemnification
from or subrogation against any person for payments made to its insured under
this section.

...



Indemnification in certain
cases



275.

(1) The
insurer responsible under subsection 268 (2) for the payment of statutory
accident benefits to such classes of persons as may be named in the regulations
is entitled, subject to such terms, conditions, provisions, exclusions and
limits as may be prescribed, to indemnification in relation to such benefits
paid by it from the insurers of such class or classes of automobiles as may be
named in the regulations involved in the incident from which the responsibility
to pay the statutory accident benefits arose.



Idem



(2)

Indemnification under subsection (1) shall be made according to the
respective degree of fault of each insurer's insured as determined under the
fault determination rules.



...







Arbitration



(4)

If the insurers are unable to agree with respect to indemnification
under this section, the dispute shall be resolved through arbitration under the
Arbitrations Act.









R.R.O. 1990, Reg. 664:
AUTOMOBILE INSURANCE



DEFINITIONS



1.

In this Regulation,




"commercial vehicle" means an automobile used primarily
to transport materials, goods, tools or equipment in connection with the
insured's occupation, and includes a police department vehicle, a fire
department vehicle, a driver training vehicle, a vehicle designed specifically
for construction or maintenance purposes, a vehicle rented for thirty days or
less, or a trailer intended for use with a commercial vehicle;



...



Direct Compensation -
Property Damage (Clause 263 (5) (b) of the Act)



6.       (1) For the purpose of
clause 263 (5) (b) of the Act, the insurer of an automobile that is in the
care, custody or control of a person who is engaged in the business of selling,
repairing, maintaining, servicing, storing or parking automobiles is entitled
to indemnification from the person.



(2) The amount of the indemnity
is limited to that proportion of the loss that is attributable to the fault, as
determined under the fault determination rules, of the person or of an employee
or agent of the person.



(7).    (1) For the purpose of
clause 263 (5) (b) of the Act, the insurer of an automobile that is being towed
by another automobile is entitled to indemnification from the lessee or, if
there is no lessee, from the owner of the automobile towing it,



(a)

if the lessee or owner, as the case may be, is engaged in the business
of towing automobiles; or



(b)

if the automobile towing the insured automobile has a gross vehicle
weight greater than 4,500 kilograms.



(2)     The amount of the
indemnity is limited to that proportion of the loss that is attributable to the
fault, as determined under the fault determination rules, of the driver of the
automobile that is towing the insured automobile.



8.       (1) For the purpose of
clause 263 (5)(b) of the Act, the insurer of an automobile the contents of
which suffer damage in an amount greater than $20,000 is entitled to
indemnification from the insurer of the other automobile involved in the
incident.



(2)    The
amount of the indemnity is limited to that proportion of the loss over $20,000
that is attributable to the fault, as determined under the fault determination
rules, of the driver of the other automobile.



...



Indemnification for Statutory
Accident Benefits (Section 275 of the Act)



9.

(1) In this section,




"first party insurer" means the insurer responsible
under subsection 268 (2) of the Act for the payment of statutory accident
benefits;




"heavy commercial vehicle" means a commercial vehicle
with a gross vehicle weight greater than 4,500 kilograms;




"motorcycle" means a self-propelled vehicle with a seat
or saddle for the use of the driver, steered by handlebars and designed to
travel on not more than three wheels in contact with the ground, and includes a
motor scooter and a motor assisted bicycle as defined in the Highway Traffic
Act;




"motorized snow vehicle" means a motorized snow vehicle
as defined in the Motorized Snow Vehicles Act;




"off-road vehicle" means an off-road vehicle as defined
in the Off-Road Vehicles Act;




"second party insurer" means an insurer required under
section 275 of the Act to indemnify the first party insurer.



(2)

A
second party insurer under a policy insuring any class of automobile other than
motorcycles, off-road vehicles and motorized snow vehicles is obligated under
section 275 of the Act to indemnify a first party insurer,



(a)

if the person receiving statutory accident benefits from the first party
insurer is claiming them under a policy insuring a motorcycle and,



(i)

if the motorcycle was involved in the incident out of which the
responsibility to pay statutory accident benefits arises, or

(ii)

if
motorcycles and motorized snow vehicles are the only types of vehicle insured
under the policy; or



(b)

if the person receiving statutory accident benefits from the first party
insurer is claiming them under a policy insuring a motorized snow vehicle and,



(i)

if the motorized snow vehicle was involved in the incident out of which
the responsibility to pay statutory accident benefits arises, or

(ii)

if
motorcycles and motorized snow vehicles are the only types of vehicle insured
under the policy.



(3)

A second party insurer under a policy insuring a heavy commercial
vehicle is obligated under section 275 of the Act to indemnify a first party
insurer unless the person receiving statutory accident benefits from the first
party insurer is claiming them under a policy insuring a heavy commercial
vehicle.







R.R.O. 1990, Reg. 668: FAULT
DETERMINATION RULES



General



1.

In this Regulation,



"centre line" of a
roadway means,



(a)

a single or double, unbroken or broken line marked in the middle of the
roadway, or



(b)

if no line is marked, the middle of the roadway or that portion of the
roadway that is not obstructed by parked vehicles, a snowbank or some other
object blocking traffic.



2.

(1) An insurer shall determine the degree of fault of its insured
for loss or damage arising directly or indirectly from the use or operation of
an automobile in accordance with these rules.



(2)     The diagrams in this
Regulation are merely illustrative of the situations described in these rules.



3.

The degree of fault of an insured is determined without reference
to,



(a)

the circumstances in which the incident occurs, including weather
conditions, road conditions, visibility or the actions of pedestrians; or



(b)

the location on the insured's automobile of the point of contact with
any other automobile involved in the incident.



4.

(1) If more than one rule applies with respect to the insured,
the rule that attributes the least degree of fault to the insured shall be
deemed to be the only rule that applies in the circumstances.



(2) Despite subsection (1), if
two rules apply with respect to an incident involving two automobiles and if
under one rule the insured is 100 per cent at fault and under the other the
insured is not at fault for the incident, the insured shall be deemed to be 50
per cent at fault for the incident.



5.

(1) If an incident is not described in any of these rules, the
degree of fault of the insured shall be determined in accordance with the
ordinary rules of law.



(2) If there is insufficient
information concerning an incident to determine the degree of fault of the
insured, it shall be determined in accordance with the ordinary rules of law
unless otherwise required by these rules.



...





RULES FOR AUTOMOBILES
TRAVELLING IN THE SAME DIRECTIONS AND LANE





9.

(1) This section applies with respect to an incident involving
three or more automobiles that are travelling in the same direction and in the
same lane (a "chain reaction").

(2)     The degree of fault for
each collision between two automobiles involved in the chain reaction is
determined without reference to any related collisions involving either of the
automobiles and another automobile.



(3)

If all automobiles involved in the incident are in motion and automobile
"A" is the leading vehicle, automobile "B" is second and
automobile "C" is the third vehicle,



(a)

in the collision between automobiles "A" and "B",
the driver of automobile "A" is not at fault and the driver of
automobile "B" is 50 per cent at fault for the incident;



(b)

in the collision between automobiles "B" and "C",
the driver of automobile "B" is not at fault and the driver of
automobile "C" is 100 per cent at fault for the incident.






(4)

If only automobile "C" is in motion when the incident occurs,



(a)

in the collision between automobiles "A" and "B",
neither driver is at fault for the incident; and



(b)

in the collision between automobiles "B" and "C",
the driver of automobile "B" is not at fault and the driver of
automobile "C" is 100 per cent at fault for the incident.







...



11.

(1) This section applies with respect to an incident involving
three or more automobiles that are travelling in the same direction and in
adjacent lanes (a "pile-up").



(2) For each collision between
two automobiles involved in the pile-up, the driver of each automobile is 50
per cent at fault for the incident.












[1]

In a 2008 article published in the Advocates Quarterly, John
McNeil explains that loss transfer is the colloquialism that is applied to the
scheme of indemnity that was created in 1990 to allow insurers, in some degree,
to recover no fault benefits paid to an insured: John S. McNeil,
The
Enigmatic Exemption to the Bar Against Subrogation: S. 275 of the Insurance Act
,
(2008) 34 Advoc. Q. 172, at p. 172



[2]

As defined in s. 224(1) of the Act, automobile includes:

(a) a motor vehicle
required under any Act to be insured under a motor vehicle liability policy,
and

(b) a vehicle prescribed by
regulation to be an automobile.



[3]

See R.R.O. 1990, Reg. 664, s. 9(1): first party insurer
means the insurer responsible under subsection 268 (2) of the Act for the payment
of statutory accident benefits.



[4]

Concerning s. 4, in
The Enigmatic Exemption to the
Bar against Subrogation: S. 275 of the Insurance Act
, at
footnote 10, p. 175, Mr. McNeil says: The Fault Determination Rules have a
dual use. They are to regulate the assessment of liability when an insured is
seeking direct compensation for the property damage to his vehicle from his
insurer, under s. 263 of the Insurance Act. When that is kept in mind, some of
the seemingly nonsensical language of the Rules (e.g. 4(1): if more than one
rule applies with respect to the insured, the one that attributes the least
degree of fault to the insured shall be deemed to be the only rule that
applies, impossible to apply in allocating fault between two motorists)
evaporates.



[5]
This statement appears to reflect a misreading of s. 9(3) of the FDRs, as s.
9(3)(a) states that in the collision between [the front and middle
automobiles], the driver [of the front automobile] is not at fault and the
driver [of the middle automobile] is 50 per cent at fault for the incident.



