



COURT OF APPEAL FOR ONTARIO

CITATION:
Travelers
    Insurance Company of Canada v. CAA Insurance Company, 2020 ONCA 382

DATE: 20200615

DOCKET: C66783

Lauwers, Paciocco and Fairburn JJ.A.

IN
    THE MATTER OF the
Insurance Act
, R.S.O. 1990, c. I.8, s. 268 (2)

and
    Ontario Regulations 34/10 and 283/96 thereunder;

AND
    IN THE MATTER OF the
Arbitration Act
, 1991, S.O. 1991, c.17;

AND IN
    THE MATTER OF an Arbitration:

BETWEEN

Travelers
    Insurance Company of Canada

Appellant

and

CAA
    Insurance Company

Respondent

Daniel
    Strigberger and Julianne Brimfield, for the appellant

Jamie R.
    Pollack and Stacey A. Morrow, for the respondent

Heard: November 26,
    2019

On appeal from the judgment of Justice Andra Pollak of the Superior
    Court of Justice, dated September 13, 2018, with reasons reported at 2018 ONSC
    3911.

Lauwers J.A.:

I.

Overview

[1]

The claimant, Patricia Soloway, was catastrophically
    injured in an accident in Nunavut, where she was temporarily employed as a
    nurse supervisor. She was driving a Nunavut-plated vehicle owned by the Government
    of Nunavut and covered by a Nunavut motor vehicle insurance policy issued by Travelers
    Insurance Company of Canada to the Government of Nunavut. Under that policy the
    claimant was entitled to Nunavut statutory accident benefits.

[2]

The claimant was ordinarily resident in Ontario.
    She owned a car plated in Ontario and insured by CAA Insurance Company under
    the terms of the Ontario Standard Automobile Policy (OAP), which included coverage
    for prescribed statutory accident benefits.
Ontario statutory
    accident benefits
are more generous than those of Nunavut.

[3]

Under the terms of her Ontario insurance policy,
    the claimant was contractually entitled to claim Ontario statutory accident
    benefits from CAA. The OAP covers an insured wherever he or she drives in North
    America. Section 1.2 of the prescribed policy form provides:

This policy covers you and other insured
    persons for incidents occurring in Canada, the United States of America and any
    other jurisdiction designated in the Statutory Accident Benefits Schedule, and
    on a vessel travelling between ports of those countries. All of the dollar
    limits described in this policy are in Canadian funds.

The CAA coverage followed the
    claimant to Nunavut. This was the basis on which the claimant was entitled to
    seek statutory accident benefits under the CAA policy, even though the accident
    that led to her injuries occurred in Nunavut and did not involve her
    Ontario-insured car. CAA has been paying those benefits.

[4]

CAA pursued Travelers for reimbursement for some
    or all of the benefits CAA paid to the claimant under Ontarios legislated
    motor vehicle insurance regime as a form of a statutory cause of action:
Unifund Assurance Company of Canada v. Insurance Corporation of
    British Columbia
, 2003 SCC 40, [2003] 2 S.C.R. 63,
    at para. 10,
per
Binnie J.

[5]

CAA succeeded in its claim against Travelers in
    an arbitration under s. 268 of the Ontario
Insurance Act
[1]
.
The arbitrator
    required Travelers to reimburse CAA for the benefits CAA had paid to the
    claimant and to assume responsibility for paying the benefits to her in the
    future. The appeal judge upheld the arbitrators decision, accepting the
    arbitrators analysis. Travelers appeals to this court.

[6]

Nothing in this decision affects the claimants
    entitlement to Ontario statutory accident benefits. The only question is which
    insurer must pay them.

II.

The Issue

[7]

The issue in this appeal is whether CAA is
    entitled under the Ontario
Insurance
    Act
to recover from
Travelers some or all of the statutory
    accident benefits that CAA has paid to the claimant and to compel Travelers to
    pay these benefits to her in the future.

[8]

As I will explain, this issue turns on whether,
    in respect of the Nunavut policy and the accident in Nunavut, Travelers is to
    be considered an Ontario insurer for the purpose of the priority provisions
    of the Ontario
Insurance Act
. I conclude that Travelers is not an
    Ontario insurer for that purpose and is not obliged to indemnify CAA or to assume
    CAAs obligations to the claimant.

III.

The Positions of the
    Parties

[9]

Travelers is prepared to pay what it is obliged
    to pay as statutory accident benefits under the Nunavut policy (for which it
    received premiums at the Nunavut level), but not the higher Ontario statutory
    accident benefits. Travelers argues that the statutory scheme does not oblige
    it to pay the Ontario benefits and that the arbitrator erred in so finding.

[10]

CAA argues that, having
    elected to take the benefits of its presence in the lucrative Ontario insurance
    market, Travelers must also take the burdens, one of which is the possibility
    that it would have to assume financial responsibility under the priority
    provisions of the Ontario
Insurance Act
, as CAA submits the arbitrator correctly found.

IV.

The Arbitrators
    Decision

[11]

The operative decision in this dispute is that of the arbitrator,
    who concluded that
s. 268 of
the
Ontario
Insurance Act
supplied CAA with a
    statutory basis for its claim against Travelers. The arbitrator relied on two
    connections between Travelers and Ontario to do so. First, he found that
    Travelers is an Ontario insurer because it: is licensed to undertake
    automobile insurance in Ontario as outlined in section 224(1) of the
Insurance Act
: at p. 8. Second, he
    found that Travelers is bound by the Power of Attorney and Undertaking (PAU),
    which Travelers signed in 1964
.
He said:

I am satisfied that as a signatory to the PAU, Travelers is
    considered to be an Ontario insurer for the purposes of this dispute between
    insurers and is therefore subject to the provisions of the
Insurance Act
, the Statutory Accident
    Benefits Schedule and its Regulations: at p. 14.


[12]

The
    arbitrator then added a determination of considerably broader application:
I find that a signatory to the PAU essentially becomes an insurer
    in the province or Territory where the claim is brought and with that exposure
    to the liability limits, accident benefit limits, as well as the loss transfer and
    priority obligations, if any, of that jurisdiction: at p. 16. The result is
    that: the priority provisions of the
Ontario
Insurance Act
apply to Travelers: at p. 16.

[13]

The arbitrator then applied s. 268(5.2) of the Ontario
Insurance Act
and stipulated that Travelers was the priority insurer with
    responsibility for paying and adjusting statutory accident benefits to and on
    behalf of the claimant, on the basis that she was the occupant of the vehicle
    Travelers insured at the time of the accident. The arbitrator required
    Travelers to indemnify CAA for the benefits it has paid to or on behalf of the
    claimant together with interest, and to assume the financial burden of future
    payments.

V.

Analysis

[14]

Because this is a statutory appeal that raises
    questions of law, including questions of statutory interpretation, the standard
    of correctness applies:
Canada (Minister of Citizenship and Immigration) v.
    Vavilov
, 2019 SCC 65, at paras. 37, 53. In any event, the arbitrator made
    several serious legal errors that I would consider constitutional,
    jurisdictional, and exceptional, in respect of which deference is not due:
Intact
    Insurance Company v. Allstate Insurance Company of Canada
, 2016 ONCA 609,
    131 O.R. (3d) 625, at para. 53, leave to appeal refused, [2016] S.C.C.A. No.
    392. The standard of correctness has always applied to questions of law:
Progressive
    Homes Ltd. v. Lombard General Insurance Co. of Canada
, 2010 SCC 33, [2010]
    2 S.C.R. 245, at para. 23;
Ledcor Construction Ltd. v. Northbridge
    Indemnity Insurance Co.,
2016 SCC 37, [2016] 2 S.C.R. 23, at para. 46;
MacDonald v. Chicago Title Insurance Co. of Canada
, 2015 ONCA 842, 127
    O.R. (3d) 663, leave to appeal refused, [2016] S.C.C.A. No. 39.

[15]

I now consider whether the arbitrator correctly
    applied
Unifund
to determine that Travelers was an Ontario insurer for
    the purposes of s. 268 and the role of the PAU in reaching that conclusion. In
    my view, the arbitrator erred in his application of the
Unifund
decision.
    His approach to the significance of the PAU would effectively turn
Unifund
on its head.

[16]

The governing principle in
Unifund
is
    that Ontarios insurance laws do not have extraterritorial effect, as Binnie J.
    explained, at paras. 50-51:

It is well established that a province has no
    legislative competence to legislate extraterritorially. If the Ontario Act
    purported to regulate civil rights in British Columbia arising out of an
    accident in that province, this would be an impermissible extraterritorial
    application of provincial legislation.

This territorial restriction is fundamental to
    our system of federalism in which each province is obliged to respect the
    sovereignty of the other provinces within their respective legislative spheres,
    and expects the same respect in return. It flows from the opening words of s.
    92 of the
Constitution Act, 1867
, which limit the territorial reach of provincial legislation: 
In each Province
the Legislature may exclusively make Laws in relation to the
    enumerated heads of power. [Emphasis in original; Internal citations omitted.]

[17]

In
Unifund
, the Brennans were insured under an Ontario policy issued by Unifund. While driving a rental car in British Columbia, they were struck by a tractor-trailer insured by the Insurance Corporation of British Columbia ("ICBC") under a British Columbia insurance policy. The Brennans sued in British Columbia and were awarded damages of about $2.5 million. Unifund had paid the Brennans statutory accident benefits under the Ontario policy from the time the Brennans claimed benefits from Unifund until the trial judge's decision, several years later. In the British Columbia action, ICBC, under British Columbia legislation, had deducted the amount of the statutory accident benefits from the trial award payable to the Brennans. Unifund sought reimbursement from ICBC of the benefits it had paid to the Brennans.

[18]

The Supreme Court found that Unifund could not use the provisions of the Ontario
Insurance Act
to recover the statutory accident benefits it had paid. In my view, the result in this case is the same.

[19]

As noted, the arbitrator in this case relied on
    two factors to tie Travelers into the Ontario statutory regime for determining
    priorities. The first was that Travelers had signed the PAU; the second is
    Travelers status as an Ontario insurer. I address each factor in turn.

[20]

The arbitrators reliance on the fact that
    Travelers had signed the PAU is contrary to Binnie J.s reasoning about the role
    of the PAU. He stated in
Unifund
, at para. 100:

The PAU is about enforcement of insurance
policies
, not
    about helping insurance companies, which have been paid a premium for the
    no-fault coverage, to seek to recover in their home jurisdictions their losses
    from other insurance companies located in a different jurisdiction when the
    accident took place in that other jurisdiction, and where the claims arising
    out of the accident were litigated there. [Emphasis in original.]

[21]

The PAU is a complex document containing many
    provisions designed to protect insureds, which Binnie J. discussed at length.
    He quoted and agreed with Professor Vaughan Blacks observation: The
    reciprocal system, of which the PAU is a key part, thus has what might loosely
    be described as a pro-compensation, consumer-protection function:
Unifund
,
    at para. 100, citing V. Black, Interprovincial Inter-Insurer Interactions:
Unifund
    v. ICBC
 (2002), 36 Can. Bus. L.J. 436, at p. 444. The PAUs purpose is to
    protect insureds, not insurers. It therefore offers no assistance to CAA in
    this dispute.

[22]

Accordingly, the arbitrator was not correct in
    his bald assertion that a signatory to the PAU essentially becomes an insurer
    in the province or Territory where the claim is brought and with that exposure
    to the liability limits, accident benefit limits, as well as the loss transfer
    and priority obligations, if any, of that jurisdiction: at p. 16. The use and
    application of the PAU in favour of insureds is context specific. If, for
    example, the claimant had driven the Nunavut vehicle into Ontario and had the
    accident here, Travelers would have had to provide her with statutory accident
    benefits at the Ontario level under the Nunavut policy. That is how the PAU is
    designed to work. But there is no basis for the arbitrators assertion that the
    PAU operates to extend loss transfer and priority obligations between or
    among insurers otherwise liable to compensate an insured under the Ontario
Insurance
    Act
s provisions.

[23]

The second factor the arbitrator relied on to
    tie Travelers into the Ontario priorities regime was Travelers status as an
    Ontario insurer: at p. 16. He rooted his decision in a single statement
    Binnie J. made in the last sentence of para. 12 of
Unifund
:

Section 275(4) of the Ontario Act provides
    that disputes about indemnification are to be resolved by arbitration, pursuant
    to the Ontario
Arbitration Act, 1991
, S.O. 1991, c. 17.
There
    is no doubt that if the appellant were an Ontario insurer, it would be required
    to arbitrate Unifund's claim.
[Emphasis added.]

[24]

Binnie J. did not explain what he meant by the
    term Ontario insurer. This is not a term of art or a technical legal term. The
    arbitrator assumed that Travelers was an Ontario insurer on the evidence
    presented by CAA  that it was licensed to undertake automobile insurance in
    Ontario, as required by s. 224(1) of the Ontario
Insurance Act
, and had
    offices in Ontario.

[25]

In my view, the correct approach is not quite so simple. Like
    Travelers, many of Canadas car insurers are licensed to write car insurance
    here and elsewhere in Canada. Mere licensing, or the presence of an office, does
    not convert these insurers into Ontario insurers for all purposes, nor does it
    make the Ontario
Insurance
    Act
the governing legislation for all of the automobile insurance policies they underwrite.
    Treating mere Ontario licensing as the sole reason to constitute an insurer as
    an Ontario insurer would give Ontario insurance legislation extraterritorial
    effect, which would be contrary to the essential holding in
Unifund
.

[26]

In
    this case, Travelers issued
a Nunavut motor
    vehicle policy
insuring
a Nunavut-plated vehicle owned
    by the Government of Nunavut. The accident occurred in Nunavut. Under that
    policy, which is governed by Nunavut insurance law, the claimant was entitled
    to Nunavut statutory accident benefits.

[27]

There are several reasons to conclude that the
    Ontario
Insurance Act
has no application to the Nunavut policy on the
    facts of this case.

[28]

The first is in the interpretation of the
    legislation. Ontario requires automobiles driven in the province to have valid insurance.
    Ontario-registered cars are usually covered by the prescribed OAP. Those who
    drive a vehicle into Ontario from elsewhere must also have adequate insurance.
    These concepts are captured by the language of the
Ontario
Insurance Act
,
    in particular Part VI, which deals with automobile insurance. Section 224(1)
    provides:

224(1) In this Part,

automobile includes,

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



contract means a contract of
    automobile insurance that,

(b) is undertaken by an insurer that
    is licensed to undertake automobile insurance in Ontario, or

(c) is
    evidenced by a policy issued in another province or territory of Canada, the
    United States of America or a jurisdiction designated in the
Statutory Accident
    Benefits Schedule
by an insurer that has filed an undertaking under section
    226.1.

[29]

In
Benson v. Belair Insurance Company Inc.
, 2019 ONCA 840,
148 O.R. (3d) 589, Feldman J.A. said, at para. 41, that the
    phrase required under any Act in s. 224(1) refers only to an Ontario statute:

I say Ontario statutes because s. 241(1)
    refers to any Act, and s. 87 of the
Legislation Act, 2006
, S.O.
    2006, c. 21, Sched. F. states that the words Act and statute, when
    used in an Act or regulation means an Act of the Legislature of Ontario.

[30]

Section 224(1) must be read together with ss.
    226 and 226.1 of the Ontario
Insurance Act
. Section 226 addresses the
    application of Part VI and provides:

226(2)
This Part does not apply to a contract providing insurance in
    respect of an automobile not required to be registered under the
Highway Traffic Act

unless it is insured under a contract
    evidenced by a form of policy approved under this Part. [Emphasis added.]

[31]

Section 226.1 supplies additional context for
    out-of-province insurers. It provides:

226.1  An insurer that
    issues motor vehicle liability policies in another province or territory of
    Canada, the United States of America or a jurisdiction designated in the
Statutory Accident Benefits Schedule
may file an undertaking with the Chief Executive Officer, in the
    form provided by the Chief Executive Officer, providing that the insurers
    motor vehicle liability policies will provide at least the coverage described
    in sections 251, 265 and 268
when the insured automobiles are operated in
    Ontario
. [Emphasis added.]

[32]

These provisions, properly interpreted, include policies
    that are issued in Ontario and policies that are issued in another province
    when vehicles from those jurisdictions are operated in Ontario. They make it
    plain that Part VI of the Ontario
Insurance Act
did not apply to the
    Nunavut vehicle operated by the claimant in Nunavut at the time of the accident
    because the vehicle was not then required to be insured in Ontario.

[33]

How did Ontario statutory accident benefits for the
    Nunavut accident come to be arbitrated under s. 268 of the Ontario
Insurance
    Act
? The purpose of s. 268 is to permit two or more insurers who might
    have responsibility for paying Ontario statutory accident benefits to determine
    responsibility on a set of prescribed priority rules. If the insurers cannot
    agree, then the issue is arbitrated under the
Disputes Between Insurers
regulation.

[34]

Although s. 268 appears to require the insured
    to select a certain insurer from which to claim benefits, that is not how the
    scheme works in practice. The historic refusal of insurers to pay benefits
    before their liability had been established through litigation led to the
    enactment in 1995 of the
Dispute

Between

Insurers
regulation:
Ontario (Finance) v. Echelon General Insurance Company
,
    2019 ONCA 629, 147 O.R. (3d) 1, at para. 12;
Allstate Insurance Company of
    Canada v. Motor Vehicle Accident Claims Fund
, 2007 ONCA 61, 84 O.R. (3d)
    401, at para. 24. The regulation allows the claimant to select the insurer
    that will pay statutory accident benefits and the selected insurer must pay.
    The paying insurer may then initiate an arbitration under the regulation to
    sort out priorities where another insurer is involved. At that point the
    claimant is no longer involved or affected by the outcome; the claimant will
    receive the benefits regardless of how responsibility is allocated between the
    insurers. That is how this case got before the arbitrator.

[35]

But the priority rules stipulated by s. 268 only
    apply if both insurers are subject to those rules. Section 268(1) provides that
    it applies to: Every contract evidenced by a motor vehicle liability policy. To
    understand what this means, one must turn to the definition of contract in s.
    224(1). That section refers to Ontario policies (s. 224(1)(a)), and to policies
    issued extra-provincially by insurers who file an undertaking in Ontario (s.
    224(1)(b)). The extent to which extra-provincial policies are caught by s.
    224(1)(b) is generally limited by s. 226.1 to situations where the vehicle that
    is registered and insured extra-provincially is actually operated in Ontario.
[2]


[36]

Section 226(2) limits the application of the Ontario
Insurance Act
in providing that Part VI 
does
    not apply
to a contract providing insurance in respect of an
automobile not required to be registered under the
Highway Traffic Act
 (emphasis added). The Nunavut
Insurance Act
,
R.S.N.W.T. (NU) 1988, c. I-4
contains
    similar provisions: ss. 1(1), 2(2), 2(3), 39, 40, 124(1), 124(3). An insurance
    policy cannot both be governed by Ontario and Nunavut law at the same time. As
    this court clarified in
Benson
, it is a legal misapprehension that
    the
lex loci delicti
[principle] should be applied to a contract and
    statutory interpretation issue involving an Ontario contract and Ontario
    legislation where that legislation specifically directs that Ontario law is to
    apply: at para. 52. By parity of reasoning the same is true with respect to a
    Nunavut insurance policy where the Nunavut legislation clearly states that
    Nunavut law governs the contract.

[37]

I
    note that this conclusion accords with this courts analysis in
Young v. Ontario (Minister of Finance)
(2003), 68 O.R. (3d) 321
    (C.A.). In
Young
, this court concluded
    that a policy of insurance issued in New Mexico was not a policy of insurance
    within the meaning of s. 268. The plaintiff
was catastrophically injured when
    her pick-up truck flipped over in New Mexico, where she resided. She returned
    home to Ontario and sought statutory accident benefits from
t
he Motor Vehicle Accident Claims Fund
, which
    is
the payor of last resort of no-fault accident
    benefits to persons injured in Ontario where there is otherwise no access to
    coverage under a motor vehicle liability policy: at para. 2. This court
    refused relief. As MacPherson J.A. explained, at paras. 31-32:

The respondent's vehicle did not need to be
    registered in Ontario. Nor did the respondent's insurance policy need to comply
    with the mandatory coverage provisions of the Compulsory Automobile Insurance
    Act. The respondent's insurance policy could not be deemed by s. 268(1) of the
    Insurance Act to provide for the statutory accident benefits set out in the
    Schedule. This is because the respondent's vehicle was not being operated in
    Ontario. Moreover, the respondent did not sustain injuries in a motor vehicle
    accident in Ontario. It follows that Part VI of the Insurance

Act, including s. 268, has no
    application to the respondent or her vehicle.

The only way in which the respondent could
    qualify for Ontario statutory accident benefits for an accident in New Mexico
    would have been if she were an insured person in respect of a particular motor
    vehicle liability policy issued in Ontario. In other words, her recourse for
    the payment of Ontario statutory benefits would have been contractual in
    nature. The respondent did not have such a policy, nor was she an insured
    person on any other Ontario policy.

[38]

Accordingly, the arbitrator erred in applying s.
    268 of the Ontario
Insurance Act
to Travelers and to the Nunavut
    policy on the facts of this case.

[39]

The second reason for questioning the application
    of s. 268 of the Ontario
Insurance Act
is that the Ontario legislation
    provides no basis on these facts for managing the inconsistencies in the
    intersection of the statutory insurance schemes of different political entities
    in Canada, nor could it do so constitutionally under
Unifund
. The
    anomalies emerge quickly. In their text,
Insurance Law in Canada
, 4th
    ed (Toronto: LexisNexis Canada, 2018), Craig Brown and Andrew Mercer make the
    following observations in s. 14.5(c)(i) on medical and rehabilitation benefits:

In most jurisdictions (
all except Ontario
), where the alternative source of compensation is another
    automobile no-fault policy,

the
    automobile insurer of the owner of the vehicle involved in the accident pays
    the no-fault benefits. If there are two or more vehicles involved, the
    insurance on each car covers the occupants of that car. If there are two cars
    involved in a collision with a pedestrian, the claim is paid by the insurer of
    the car that created the force which caused the impact.
[Emphasis added.]

[40]

The authors explain their statement that: 
the automobile insurer of the owner of the vehicle involved in the
    accident pays the no-fault benefits
 in an instructive
    footnote:

This is made clear in most of the Insurance
    Acts; see Alberta, s. 591(1); New Brunswick, s. 260(1); Nova Scotia, s. 143(1);
    Northwest Territories, s. 161(1). The matter appears to be dealt with in
    Newfoundland (s. 34(3)) and the Yukon (s. 159(3)) by a provision (which also
    appears in addition to those cited above in other Insurance Acts except P.E.I.
    and Nova Scotia) which provides:

(3) The insurance mentioned in paragraph
    (a) of subsection (1) is first loss insurance, and any other automobile
    insurance of the same type available to the injured person or in respect of a
    deceased person is excess insurance only. Although the meaning of this
    provision is not entirely clear, the confusion has been resolved in practice by
    a rule in the Insurance Bureau of Canada Inter-Company Claims Agreement. The
    insurer of the vehicle involved in the accident pays.

In contrast, in Ontario, a claimant's first
    recourse is to his/her own insurer. See Ontario
Insurance
    Act
, s. 268(2). [Internal citations omitted.]

[41]

T
he Nunavut
Insurance Act
has a similar provision
    to the usual provisions outside Ontario and stipulates what happens when more
    than one policy applies:

157(1) Every contract evidenced by a
    motor vehicle liability policy shall provide the benefits set out in subsection
    1 of the Schedule subject to the limits, terms and conditions set out in the
    Schedule.



157(4)

The insurance mentioned in subsection (1) is a first loss insurance,
    and any other automobile insurance of the same type available to the injured
    person or in respect of a deceased person is excess insurance only.



161(1) Where a person entitled to
    benefits provided by insurance under sections 157 and 158, or either of them,

(a) is
    an
occupant

of a motor vehicle involved in an accident,
the
    insurer of the owner of the motor vehicle
is, in the first instance,
liable
    for payment
of the benefits provided by the insurance. [Emphasis added.]

[42]

If
    the claimant had made a claim in Nunavut against her employers policy with
    Travelers, the Nunavut legislation would have designated the Nunavut policy as
    the primary policy. It is not clear how or whether the claimants entitlement
    to coverage under CAAs Ontario insurance policy would have figured in, since
    Nunavut legislation can have no extraterritorial application under
Unifund
. There is no evidence before the court on the
    impact of the Insurance Bureau of Canada
Inter-Company Claims
    Agreement, which

Brown and Mercer mention, on the
    way that insurers privately address the primary and excess coverage issues that
    this legislation and the legislation of other provinces might create.

[43]

Next,
    assuming that s. 268 of the Ontario
Insurance Act
governs in these circumstances, did
    the arbitrator apply the section properly? That question turns on
which of two subsections is applicable, ss. 268(5.1) or (5.2). They
    provide:

(5.1)  Subject to
    subsection (5.2), if there is more than one insurer against which a person may
    claim benefits under subsection (5), the person, in his or her discretion, may
    decide the insurer from which he or she will claim the benefits.

(5.2)  If
    there is more than one insurer against which a person may claim benefits under
    subsection (5) and the person was, at the time of the incident, an occupant of
    an automobile in respect of which the person is the named insured or the spouse
    or a dependant of the named insured, the person shall claim statutory accident
    benefits against the insurer of the automobile in which the person was an
    occupant.

[44]

The arbitrator quoted these subsections and referred
    to s. 3(7)(f) of the
Statutory Accidents Benefits Schedule
, O. Reg.
    34/10, which provides:

An individual who is living and
    ordinarily present in Ontario is deemed to be the named insured under the
    policy insuring an automobile at the time of an accident if, at the time of the
    accident,

(i) the insured automobile is
    being made available for the individuals regular use by a corporation,
    unincorporated association, partnership, sole proprietorship or other entity.

[45]

The arbitrator took this view, at p. 17:

If it were demonstrated that the claimant had
    regular use of the vehicle she was operating at the time of the accident, she
    would be considered a deemed named insured. Being a named insured on a policy
    with CAA and a deemed named insurer under the Travelers policy, the tie
    breaking mechanism of s. 268(5.2) would apply and the insurer of the vehicle in
    which she was an occupant, Travelers, would stand in priority if regular use
    cannot be demonstrated then CAA would stand in priority by reason of s.
    268(2)(i).

[46]

The arbitrator found that: the claimant had regular
    use at the time of the accident and was a deemed named insured under the
    Travelers policy and also a named insured under her policy with CAA: at p.
    19.  He applied s. 268(5.2) and found Travelers to be the priority insurer. I
    note that Travelers did not appeal the arbitrators determination that the
    claimant is deemed to be a named insured under the Nunavut policy analyzed
    under Ontario law. However, I see this as a legal question that must be
    resolved in order to correctly determine the appeal.

[47]

The difficulty with this analysis is that the
    arbitrator assumed that Ontario law was applicable in determining both the
    claimants status under the Nunavut policy and her entitlement to statutory
    accident benefits, without regard to the Nunavut legislation or to the Nunavut
    policy limits. Under the Nunavut policy, the claimant was not a named insured
    and the Nunavut legislation does not include the concept of a deemed named
    insured. If Nunavut legislation had been considered and applied in determining
    the claimants status under the Nunavut policy, the claimant would not be a
    named insured within the meaning of s. 268(5.2). Instead, s. 268(5.1) of
    the Ontario
Insurance Act
would apply. The claimant, in her
    discretion, claimed benefits from CAA, and that choice would govern.

[48]

Further, under Nunavut law, the claimant was
    only entitled to Nunavut statutory accident benefits. As noted, if the claimant
    had been driving the Nunavut vehicle in Ontario at the time of the accident,
    the PAU would have obliged Travelers to pay statutory accident benefits at the
    Ontario rate and not the Nunavut rate, but that is not what happened here. There
    is no legal basis on which the arbitrator could force Travelers to pay more
    than the Nunavut limits under its Nunavut policy. Ontarios
Insurance Act
cannot have extraterritorial application to compel Travelers to accept the
    burden of Ontario statutory benefits in this case, and the terms of the PAU do
    not alter that.

[49]

Both
    the arbitrator and the appeal judge erroneously treated Travelers as an Ontario
    insurer in this case and the Nunavut policy as an Ontario policy. The
    arbitrator and the appeal judge mistakenly looked to the PAU as preventing
    Travelers from taking the position that it was not required to pay Ontario statutory
    accident benefits under the Nunavut policy. As noted, this is contrary to
Unifund

because it would
    constitute an extraterritorial application of Ontario law. Nor is it justified
    under the PAU, which does not have the effect of converting a Nunavut insurance
    contract into an Ontario insurance contract and does not, by its terms, require
    Travelers to pay Ontario statutory accident benefits in this case:
Potts v. Gluckstein
(1992), 8 O.R. (3d) 556 (C.A.), at
    para. 12, leave to appeal refused, [1992] S.C.C.A. No. 42, citing
Corbett v. Co-operative Fire & Casualty Co.
(1984),
    34 Alta. L.R. (2d) 158 (Q.B.), at para. 31,
per
Shannon
    J., citing
MacDonald v. Proctor
(1977), 19
    O.R. (2d) 745 (C.A.), affd [1979] 2 S.C.R. 153.

[50]

CAA submits that this court should apply the
    reasoning in
Primmum Insurance Co. v. Allstate Insurance Co.
, 2010
    ONSC 986, 100 O.R. (3d) 788, affd 2010 ONCA 756,
107 O.R. (3d) 159
, leave to appeal refused, [2011] S.C.C.A.
    No. 13, a case that specifically addresses the application of s. 275 of
    the Ontario
Insurance Act
.

[51]

In
Primmum
, an Ontario resident was
    insured under an Ontario policy issued by Primmum. He was riding his motorcycle
    in North Carolina when he was struck and injured by a pick-up truck insured by
    Allstate under a policy issued in North Carolina. As of 2010, Allstate was
    licensed to provide insurance in Ontario and had an office in Markham, Ontario.
    Allstate argued that s. 275 of the Ontario
Insurance Act
 the loss
    transfer provision  only applied where the accident occur[ed] in Ontario or
    both policies were issued in Ontario and that the section d[id] not apply
    where one of the policies was issued outside of Ontario to cover a vehicle
    licensed and registered outside Ontario, even though it has signed a PAU: at
    para. 22.

[52]

The
Primmum
application judge stated,
    at paras. 20, 28:

If both of the insurers are registered in and
    carry on business in Ontario, they may claim loss transfer, even if the
    accident occurred in a non-loss-transfer jurisdiction such as Vermont:
Royal & Sun Alliance Insurance Co. v. Wawanesa Mutual Insurance
    Co
. (2006), 84 O.R. (3d) 449, [2006] O.J. No. 5131,
    2006 CanLII 42663 (S.C.J.), per Newbould J., who followed Binnie J. in
Unifund
.



In the
Insurance
    Act
, Allstate is an insurer under s. 1 and it
    issues contracts because it is licensed to sell insurance in Ontario under s.
    224(1)(a). The premiums it charges for the insurance or the limits of coverage
    in North Carolina are of no concern to Ontario.

[53]

He therefore determined Allstate was a licensed
    Ontario insurer under the Ontario
Insurance Act
because Allstate met
    the definition of insurer and was licensed to undertake and sell automobile
    insurance in Ontario: at paras. 17, 20. He concluded that Allstate could have
    avoided liability by either deregister[ing] as an Ontario insurance company or
    incorporat[ing] a subsidiary to sell insurance in North Carolina: at para. 29.

[54]

This court
    upheld the
Primmum
decision. In a brief endorsement, this
    court simply quoted Binnie J.s sentence in
Unifund
and held that Allstate is an Ontario
    insurer, accordingly it must arbitrate Primmums claim: at para. 7. In doing
    so, it appears that the court rejected Allstates argument in its written
    submissions that Binnie J.s statement was
obiter
.

[55]

I conclude that
Primmum
is of no
    assistance in this case. It does not touch the earlier determination that the
    arbitrator in this case erred in his interpretation of s. 268 of the Ontario
Insurance

Act
, which was not at issue in that case.
Primmum
dealt only
    with the application of s. 275 of the Ontario
Insurance Act
, the
    underlying purpose of which is distinct from the purpose underlying the
    priority rules in s. 268.
[3]


[56]

Moreover, neither the
Primmum
application judge nor this court explored what Binnie J. meant by Ontario
    insurer, which, as noted earlier, is not a defined term. That exploration
    remains open to the court and has been undertaken in this case.

[57]

For these reasons, I conclude that
Primmum
is not applicable to the factual scenario presented in this appeal.
[4]


Conclusions

[58]

In
    my view, the arbitrator erred in law in finding that Travelers was an Ontario
    insurer required to arbitrate priorities with CAA under s. 268 of the Ontario
Insurance Act
, for the reasons set out above. Further,
    if the arbitrator had been correct in that finding, he misapplied the section by
    failing to give effect to Nunavut law regarding the claimants status and the
    limits on her entitlement to Nunavut benefits under Nunavut legislation. The
    arbitrator should have found that s. 268(5.1) applied so that the
    claimants decision to seek statutory accident benefits from CAA was final and
    binding on CAA.

VI.

Disposition

[59]

I would allow the appeal, set aside both the
    order of the appeal judge and the award of the arbitrator, and issue a
    declaration that Travelers is not liable under s. 268 of the Ontario
Insurance
    Act
to reimburse CAA for the benefits CAA has paid to the claimant or to
    assume responsibility for paying the benefits to her in the future.

[60]

I would award the costs of the appeal to
    Travelers in the agreed amount of $10,000 all-inclusive, reverse the costs
    awards made by the arbitrator and the appeal judge against Travelers, and
    require CAA to pay the same amounts to Travelers.

Released: P.L. June 15, 2020

P.
    Lauwers J.A.

I
    agree. David M. Paciocco J.A.

I
    agree. Fairburn J.A.





[1]

Insurance Act
,

R.S.O. 1990, c. I.8. The arbitration
    took place
under s. 7 of
Disputes Between Insurers
, O. Reg.
    283/95 before Arbitrator Kenneth J. Bialkowski:
CAA Insurance Co. and
    Travelers Insurance Co., Re
(2017), 66 C.C.L.I. (5th) 149.



[2]
I note that
Part VI of the Ontario
Insurance Act
also
    applies to a foreign insured when they are injured in any vehicle driven in
    Ontario through the operation of the PAU:
Healy v. Interboro Mutual
    Indemnity Insurance Company
(1999), 44 O.R. (3d) 404 (C.A.).



[3]

See the discussion by John S. MacNeil in The Enigmatic
    Exception to the Bar Against Subrogation: S. 275 of the Insurance Act
    (2008), 34 Adv. Q. 172 at pp. 175-178.
Section 275 was
    introduced as a limited exception to the prohibition against recovering
    no-fault benefits through subrogation. As Mr.
MacNeil points out, s
. 275 was not intended to re-order the priority rules for payment of
    benefits. Instead, it introduced a statutory indemnity to give effect to a
    fault-based balancing of any inequity introduced by the expanded no-fault
    regime. It does not transfer responsibility for payment of accident benefits
    but permits a partial statutory indemnity in certain cases.



[4]

Travelers did not argue that
Primmum
was wrongly
    decided or
that the
per incuriam
exception should be
    applied. The
Primmum
application judge did not address
Young v.
    Ontario (Minister of Finance)
in
concluding that Allstate was an Ontario insurer within Binnie J.'s meaning in
Unifund
.
I leave the question of whether
Primmum
was correctly decided for
    another day.


