



COURT OF APPEAL FOR ONTARIO

CITATION: State Farm Mutual Automobile Insurance Company v.

Aviva Canada Inc., 2015 ONCA 920

DATE: 20151224

DOCKET: C60035

Gillese, Epstein and Roberts JJ.A.

In the Matter of the
Insurance Act
,
    R.S.O. 1990, c. I.8, as amended 
    and Ontario Regulation 668 thereunder

And in the Matter of the
Arbitration Act
,
    S.O. 1991, c. 17, as amended

And in the Matter of an Arbitration

BETWEEN

State Farm Mutual Automobile Insurance Company

Applicant (Appellant)

and

Aviva Canada Inc.

Respondent (Respondent)

Daniel Strigberger and Monika Bolejszo, for the
    appellant

Charlia von Buchwald, for the respondent

Heard: September 25, 2015

On appeal from the order of Justice James M. Spence of
    the Superior Court of Justice, dated October 10, 2014.

Gillese J.A.:

INTRODUCTION

[1]

An accident occurred on May 1, 2009, at the intersection of Yonge Street
    and Richmond Street in Richmond Hill, Ontario. Whose fault was it? In this
    appeal, the answer to that question depends upon how rule 5(1) of the
Fault
    Determination Rules
, R.R.O. 1990, Reg. 668 (the 
FDRs
)
[1]
is interpreted

[2]

Rule 5(1) reads as follows:

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.
[Emphasis added.]

[3]

As will be seen, the meaning of the emphasized words in rule 5(1) is critical.

[4]

The role that rule 3 of the
FDRs
is to play, if any, in
    interpreting the emphasized words is also crucial. Rule 3 reads as follows:

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 insureds automobile of the
    point of contact with any other automobile involved in the incident.

BACKGROUND

1.

The Accident

[5]

On the day in question, Ali Shalforoushzadeh (Ali) was driving his
    motorcycle southbound in the curb lane of Yonge Street, approaching the
    intersection where the accident took place. Some cars were stopped in the
    southbound passing lane to Alis left.

[6]

Meanwhile, Eric Basciano (Eric) was driving his car in the northbound passing
    lane on Yonge Street. He was on his way back to the hair salon that he owned,
    which was located near the intersection in question. He needed to turn left at
    the intersection.

[7]

The intersection does not have traffic lights guiding the flow of
    traffic.

[8]

Traffic was heavy. Eric stopped his car in the northbound passing lane
    and waited for a break in the southbound traffic so that he could turn left. He
    waited for a while and was then waved through the intersection by a driver
    who was stopped in the southbound passing lane. Eric did not see Ali and his motorcycle
    before he turned. It was only after Eric completed his turn that he heard
    skidding sounds. When he checked his rearview mirror, he saw a motorcycle
    skidding through the intersection.

[9]

There was no collision between the two vehicles. However, as a result of
    Erics turn into the southbound lane of traffic, Ali swerved. He lost control
    of his motorcycle, fell to the ground and was injured.

[10]

Ali
    applied to his insurer, State Farm Mutual Automobile Insurance Company (State
    Farm), for accident benefits payments. State Farm paid him the benefits and
    then sought indemnification from Erics insurer, Aviva Canada Inc. (Aviva),
    under the loss transfer provisions of the
Insurance Act
, R.S.O. 1990,
    c. I.8 (the 
Act
).
[2]

2.

The Arbitration Award

[11]

State
    Farm and Aviva did not agree on the matter of indemnification and took the
    matter to arbitration. The arbitration proceeded on the basis of their agreement
    that fault was to be determined based on rule 5(1) of the
FDRs
. The
    parties were divided, however, on how rule 5(1) was to be interpreted and applied.

[12]

In
    an award dated February 14, 2014 (the Award), the arbitrator determined that Eric
    was 100% at fault for the accident.

[13]

The
    arbitrator heard the oral testimony of both drivers. She also had before her
    the transcripts of the examination for discovery of the drivers. She weighed
    the evidence and made the following findings of fact:

·

Ali clearly had the right of way as he proceeded southbound on
    Yonge Street, approaching the intersection in question;

·

Ali did not have a full view of the intersection as he approached
    it because of cars that were stopped in the passing lane to his left;

·

there was no evidence that Ali was travelling at a speed faster
    than approximately 30 km/hr, a speed well below the posted speed limit of 50
    km/hr;

·

Eric did not see Alis motorcycle before making his left turn,
    although it is clear that the motorcycle was there to be seen;

·

there was no impact between the vehicles but as a result of Erics
    turn, Ali lost control of his motorcycle, fell to the ground and sustained
    injuries.

[14]

The
    arbitrator then considered how rule 5(1) was to be applied. She concluded that rule
    5(1) calls for an analysis that is distinct from the approach required in a
    pure tort analysis. Her reasoning can be summarized as follows.

[15]

Rule
    5(1) of the
FDRs
requires that the insureds degree of fault be
    determined in accordance with the ordinary rules of law. The
FDRs
are
    a complete code referenced in s. 275 of the
Act
. Any fault determination
    conducted under the
FDRs
must be informed by rule 3 of the
FDRs
,
    which is an umbrella provision. Rule 3 requires that the degree of fault be
    determined without reference to various circumstances, including the weather and
    road conditions, actions of pedestrians, and the location on the insureds
    automobile of the point of impact.

[16]

The
    arbitrator went on to say that relevant
Highway Traffic Act
, R.S.O.
    1990, c. H.8

(
HTA
)

provisions and case law should
    not be ignored. She took note of rule 12(5) of the
FDRs
, which dictates
    a finding of 100% fault on the part of a left-turning vehicle where there is a
    collision between that vehicle and one proceeding straight through an intersection.

[17]

The
    arbitrator also noted that the
HTA
provisions regarding left-turning
    vehicles are consistent with rule 12(5). Section 141(5) of the
HTA
states
    that a driver must not turn left at an intersection into the path of an
    oncoming vehicle unless that driver has afforded a reasonable opportunity to
    the driver or operator of the approaching vehicle to avoid a collision.

[18]

The
    arbitrator found that Eric  the driver of the left-turning vehicle  did not
    see Ali approaching the intersection on his motorcycle and, therefore, could
    not have provided Ali with the opportunity to avoid the collision. She also
    found that Alis motorcycle was there to be seen even though Eric testified
    he did not see Ali approaching the intersection.

[19]

The
    arbitrator opined that if this case had been considered within the context of a
    tort action, some contributory negligence might be attributed to Ali based on
Nash
    v
.
Sullivan
(1973), 1 O.R. (2d) 133, 1973 CanLII 785 (C.A.). However,
    because of her analysis of the loss transfer provisions, she found Eric to be
    100% at fault for the accident.

3.

The Order under Appeal

[20]

Aviva
    brought an application in which it appealed the Award. By order dated October
    10, 2014 (the Order), the application judge set aside the Award and declared that
    Ali was 50% at fault for the accident.

[21]

The
    application judge noted the arbitrators determination that Ali had the right
    of way, a matter that was not disputed. He also noted the arbitrators finding
    that the motorcycle was there to be seen and stated that there is no basis
    to consider this finding of fact unreasonable.

[22]

However,
    the application judge said that the arbitrator erred in law when she disregarded
    the circumstance that cars were stopped to Alis left as he approached the
    intersection and failed to attribute contributory negligence. The application
    judge saw nothing in the provisions relating to the loss transfer scheme which required
    that circumstance to be ignored. He said that Alis failure to be alert as he
    approached the intersection  given that cars were stopped to his left  was the
    same type and degree of negligence as that of Eric. Based on
Nash
, the
    application judge apportioned fault for the accident on a 50/50 basis.

THE ISSUES

[23]

State
    Farm appeals to this court, asking that the Order be set aside and the Award be
    reinstated. It submits that the application judge erred by:

1.

making a finding of fact that the arbitrator did not make;

2.

failing to give deference to the arbitrators findings of fact and
    negligence under the ordinary rules of law;

3.

applying
Nash
to the facts of this case; and

4.

finding that the arbitrator incorrectly interpreted rule 5(1) of the
FDR
s.

ANALYSIS

Issue #1: A Finding of Fact not made by the Arbitrator

[24]

The
    application judge found Ali to be 50% at fault because he failed to be alert
    when approaching the intersection, despite the fact that cars were stopped to
    his left. State Farm says that it was an error for the application judge to
    have made the finding that Ali failed to be alert.

[25]

I
    agree.

[26]

The
    arbitrator heard the oral evidence and made no such finding. It was she who had
    the advantage of seeing and hearing the testimony first-hand. In this case, the
    evidence was mainly testimonial  as opposed to documentary  and credibility
    was in issue. In such a case, the application judge should have been wary of
    making such a finding:
Hollis v. Dow Corning Corp.
,

[1995] 4
    S.C.R. 634, 1995 CanLII 55, at para. 33.

[27]

In
    any event, however, there is nothing in the record to support the application
    judges finding that Ali failed to be alert when approaching the intersection.

Issue #2: Deference Owed to the Arbitrators Findings

[28]

State
    Farm submits that unless unreasonable, arbitral conclusions of mixed fact and
    law are entitled to deference. Therefore, because the application judge found
    the arbitrators findings of fact to be reasonable, State Farm says that he
    committed an error in law in setting aside her finding of fault.

[29]

In
    my view, this submission is misguided. The application judge set aside the
    arbitrators finding of fault because he viewed the arbitrator as having erred
    in law in determining fault under rule 5(1) of the
FDRs
. Thus, the
    question is whether the arbitrator applied the correct legal principles in
    making that determination. That question is the subject matter of Issue #4.

Issue #3: Whether
Nash
Applies

[30]

Given
    the arbitrators factual findings, in my view,
Nash
does not apply and
    the application judge erred in so doing.

[31]

In
Nash
, a driver was waiting to make a left turn at an intersection (the
    Defendant). He was travelling on a through street with two lanes in either
    direction. Traffic was heavy in both directions. An oncoming motorcyclist
    approached the intersection. Cars in the passing lane to the left of the
    motorcyclist were stopped. The driver of one of those stopped cars flashed his
    lights, indicating to the Defendant that he would wait while the Defendant made
    his left turn. The Defendant moved slowly into the intersection and hit the
    motorcyclist, who had approached the intersection in such a manner that he was
    hidden from the view of oncoming motorists intending to make a left turn.

[32]

The
    trial judge found the Defendant to be 100% liable for the accident because the
    motorcyclist had the right of way.

[33]

This
    court set aside the trial decision and held that the Defendant and the
    motorcyclist were equally at fault for the accident. It held that the
    motorcyclist was negligent in failing to slow his motorcycle and keep a proper
    look-out when he saw, or should have seen, that the cars to his left had
    stopped and because he approached the intersection in such a manner that he was
    hidden from the view of motorists intending to make a left turn.

[34]

While
    there are a number of common features between this case and
Nash
,
    there is one significant factual difference. In
Nash
, as the
    motorcyclist approached the intersection, he was hidden from the view of the oncoming
    left-turning drivers. The facts of this case, on that point, are completely to
    the contrary. Not only was there no finding that Ali was hidden from the view
    of motorists intending to make a left turn into the intersection, the
    arbitrator expressly found that Ali was there to be seen. It is noteworthy
    that the application judge commented on this finding, saying that there was no
    basis to consider it unreasonable.

[35]

For
    these reasons, in my view, the application judge erred in applying
Nash
and
    apportioning liability.

Issue #4: Interpreting Rule 5(1) of the
FDRs

[36]

Did
    the arbitrator correctly interpret rule 5(1) or was the application judge
    correct to find that she had erred in law? To resolve this issue, I will:

A.

provide an overview of the competing approaches of the arbitrator and
    the application judge, the parties positions on the issue, and my conclusion as
    to which approach is correct; and

B.

interpret the ordinary rules of law in rule 5(1), in light of:


i.

Ontarios loss transfer scheme;


ii.

rule 3 of the
FDRs
; and,


iii.

a consideration of the quoted words in context.

[37]

I
    will conclude by responding to two other considerations raised by Aviva.

A.

Overview

[38]

Rule
    5(1), it will be recalled, reads as follows:

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.

[39]

Because
    the accident in this case is not described in any of the
FDRs
, rule
    5(1) applies to determine fault.

[40]

Pursuant
    to rule 5(1), the degree of fault of each insured is to be determined in
    accordance with the ordinary rules of law (the quoted words). Therefore, to
    correctly apply rule 5(1), we must first understand what is meant by the quoted
    words.

[41]

The
    arbitrator proceeded on the basis that fault determination under rule 5(1) must
    be informed by the instruction given in rule 3 of the
FDRs
. Because
    rule 3 requires the degree of fault to be determined without reference to the
    circumstances in which the incident occurs, in the arbitrators view, the
    quoted words in rule 5(1) call for an approach distinct from a pure tort law
    analysis. To determine the degree of fault, she looked at rule 12(5) of the
FDRs
 which governs situations similar to this case except that they involve a
    collision  and s. 141(5) of the
HTA
. She did not use tort law to
    determine fault.

[42]

The
    application judge acknowledged that rules 1 through 5 of the
FDRs
are provisions
    of general application. However, he saw nothing in them that would require the
    court to disregard the circumstances of the accident  specifically, that the
    cars to Alis left as he approached the intersection were stopped  for the purposes
    of determining fault under rule 5(1). In his view, it was an error in law for
    the arbitrator to have disregarded that circumstance. As a result, he set aside
    her decision and determined fault in accordance with the tort law jurisprudence,
    specifically, the
Nash
decision.

[43]

State
    Farm says that, for the reasons given by the arbitrator, it was she who interpreted
    rule 5(1) correctly, not the application judge.

[44]

Aviva
    takes the opposite position. It says that the application judge was right to
    reject the arbitrators use of rule 3 when determining fault under rule 5(1). It
    contends that rule 3 applies when fault is determined under rules 6 through 19
    of the
FDRs
but the quoted words dictate that fault under rule 5(1) is
    to be determined through the application of tort law. Aviva points to some judicial
    and arbitral decisions as support for its position.

[45]

In
    my view, the arbitrator correctly interpreted and applied the quoted words in rule
    5(1), having regard to the purpose and scheme of the loss transfer provisions as
    a whole. Accordingly, there was no basis for the application judge to set aside
    the Award and substitute his own determinations as to fault.

B.

Interpreting the ordinary rules of law in rule 5(1)

[46]

The
    meaning to be given to the ordinary rules of law in rule 5(1) of the
FDRs
is a matter of statutory interpretation. I make this seemingly obvious point
    because the decisions relied on by Aviva have not approached the matter in that
    fashion. Instead, those decisions are based on the assumption that the words
    the ordinary rules of law in rule 5(1) mean the ordinary rules of
tort
law. I pause to note that it would have been a
    simple matter for the legislature to have included the word tort in the
    quoted words in rule 5(1), had that been its intention. In any event, when the
    meaning of the quoted words is approached as a matter of statutory
    interpretation, it becomes clear that the word tort should not be read into
    rule 5(1).

[47]

As
    a matter of statutory interpretation, the task is to discover the intention of
    the legislator as expressed by the words the ordinary rules of law. To
    accomplish that task, those words are to be considered in their entire context,
    and read in their grammatical and ordinary sense, in harmony with the legislative
    framework within which they are found:
Bell ExpressVu Limited Partnership v
.
Rex
, 2002 SCC 42, [2002] 2 S.C.R. 559, at paras. 26, 55.

[48]

The
    quoted words are within rule 5(1), rule 5(1) is part of the
FDRs
, and
    the
FDRs
are an integral part of Ontarios loss transfer scheme. Ontarios
    loss transfer scheme, therefore, provides the context within which to consider
    the quoted words.  Thus, I begin with a consideration of that scheme.


i.

Ontarios loss transfer scheme

[49]

Under
    the
Act
, Ontario has a partial no-fault system. Since June 1990,
    regardless of fault, insureds look to their own insurers for the payment of statutory
    accident benefits, rather than seeking compensation from third parties (and
    their insurers). The Ontario legislature introduced the loss transfer scheme to
    address the cost implications for insurers of moving to this partial no-fault
    system: Ontario Insurance Commission (now the Financial Services Commission of
    Ontario), Interpretation Bulletin No. A-11/94, Loss Transfer: Standardized
    Forms and Procedures (6 June 1994).

[50]

Section
    268 of the
Act
requires an insurer to pay statutory accident benefits
    to its insured, in certain circumstances.  A motorcyclist is covered by this
    provision.
[3]
An insurer who pays such benefits to its insured is known as the first party
    insurer.

[51]

Section
    275 of the
Act
establishes the process by which the first party
    insurer can claim indemnification from another insurer.

[52]

Section
    275(1) allows the first party insurer, in certain situations, to claim
    indemnification from the insurer of the other driver involved in the accident. In
    this situation, the other drivers insurer is known as the second party
    insurer. It is the indemnification of the first party insurer by the second
    party insurer which is known as loss transfer.

[53]

Section
    275(2) of the
Act
requires that indemnification be made according to
    the respective degree of fault of each insurers insured as determined under
    the [
FDRs
].
[4]

[54]

The
FDRs
consist of twenty rules. The first five rules are general
    provisions. Those provisions are discussed below. Rules 6 through 19 contain a
    series of general types of incidents and specify the fault to be attributed to
    each driver in each incident. Fault is not a nuanced determination in rules 6
    through 19: it is typically assigned as 50% or 100%. Rule 20 provides the rules
    for fault determination when a driver involved in an incident is charged with a
    driving offence.

[55]

If,
    as in this case, the first party and second party insurers cannot agree on
    indemnification under s. 275, s. 275(4) of the
Act
requires them to
    resolve the matter through arbitration under the
Arbitration Act, 1991
,
    S.O. 1991, c. 17.

[56]

The
    legislation which creates the loss transfer scheme consists of the relevant
    provisions of the
Act
together with the
FDRs
. The purpose of
    the loss transfer scheme is to provide for an expedient and summary method of
    spreading the cost of statutory accident benefits among insurers, in a gross
    and somewhat arbitrary fashion, favouring expediency and economy over finite
    exactitude:
Jevco Insurance Co. v. York Fire & Casualty Co.
(1996),
    27 O.R. (3d) 483, 1996 CanLII 11780 (C.A.), at paras. 8-9.


ii.

Rule 3 of the
FDRs

[57]

For
    ease of reference, I set out rule 3 again now:

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 insureds automobile of the
    point of contact with any other automobile involved in the incident.

[58]

A
    plain reading of rule 3, considered in conjunction with its location in the
FDRs
and the purpose of the loss transfer scheme, leads me to conclude that rule 3
    informs all fault determinations made under the
FDRs
, including those
    made pursuant to rule 5(1).

The wording of rule 3

[59]

Rule
    3 says that fault is to be determined without reference to  the circumstances
    in which the incident occurs. There is nothing in the wording of rule 3 which limits
    its application to rules 6 through 19, as Aviva contends. On a plain reading,
    rule 3 applies to all determinations of fault made under the
FDRs
,
    including those made under rule 5(1)
.

Rule 3s location in the
FDRs

[60]

Rules
    1 through 5 of the
FDRs
are located under the heading General. The wording
    of rules 1 through 5 and their location at the beginning of the regulation show
    that they are rules of general application in the
FDRs
.

[61]

Rule
    1 defines the centre line of a roadway.

[62]

Rule
    2(1) provides that an insurer shall determine the degree of fault of its
    insured  in accordance with [the
FDRs
].

[63]

Rule
    3, as I have just explained, limits the way in which fault is determined under
    the
FDRs
.

[64]

Rule
    4 governs situations in which more than one rule applies to an insured or
    incident.

[65]

And,
    as previously discussed, rule 5 governs where an incident is not described in
    any of the
FDRs
.

[66]

Accordingly,
    rule 3s location in the
FDRs
supports the view that it is a rule of
    general application and informs fault determinations made under rule 5(1), as
    well as those made under rules 6 through 19.

Rule 3 in light of the purpose of Ontarios
    loss transfer scheme

[67]

The
    view that rule 3 informs all fault determinations made under the
FDRs
,
    including those made pursuant to rule 5(1), is further reinforced by reference
    to the purpose of Ontarios loss transfer scheme. That purpose, as previously indicated,
    is to provide an expedient and summary method of resolving indemnification
    claims.

[68]

A
    determination of fault in tort law is often a lengthy, detailed and nuanced process,
    which requires findings of fact on the very circumstances excluded from
    consideration by rule 3. By precluding a pure tort law approach to fault
    determination, rule 3 acts in harmony with the purpose of the legislative scheme
    because it promotes an expedient, more summary approach for determining fault.


iii.

The ordinary rules of law considered in context

[69]

Having
    determined that rule 3 informs fault determinations made under rule 5(1), the
    ordinary rules of law cannot be interpreted as the ordinary rules of tort law.
    A determination of fault based on tort law rules would necessarily engage a
    consideration of the circumstances that the legislature purposefully excluded
    from consideration by rule 3. Furthermore, as already discussed, resort to pure
    tort law for the determination of fault would run contrary to the purpose of
    the loss transfer scheme, which is to provide an expedient and summary way of
    resolving indemnification claims.

[70]

Recourse
    to pure tort law for the determination of fault under rule 5(1) would also run
    contrary to s. 275(2) of the
Act
. Section 275(2) of the
Act
,
    it will be recalled, provides that indemnification depends on fault and fault
    is to be determined under the
FDRs
. In short, s. 275 establishes the
FDRs
as a complete code for determining fault in the indemnification context.  This
    dictate is reinforced by rule 2 of the
FDRs
, which provides that insurers
    are to determine the degree of fault of their insureds in accordance with the
FDRs
.

[71]

Finally,
    as I noted previously, had the legislature intended that fault determinations under
    rule 5(1) were to be made in accordance with the ordinary rules of tort law, it
    would have been an easy matter to have included the word tort. It did not do
    so. In my view, that was a deliberate decision because it enabled rules 3 and
    5(1) to be read in harmony with one another and the whole of the legislative
    scheme.

C.

Two concluding points

[72]

Aviva
    raised two other points which warrant comment.

[73]

Point
    #1  Aviva says that if fault is not determined under rule 5(1) in accordance
    with tort law, the parameters for fault determination under that rule are unclear.
    I accept this complaint to a point: it is correct that determining fault without
    reference to pure tort law creates some uncertainty as to what can be referred
    to, in making that determination. However, as the Award in the present case demonstrates,
    reference can be made to rules of law, despite there being no clear
    definition of those words. In the Award, the arbitrator referred to two things,
    both of which fall within the meaning of the ordinary rules of law as those
    words are used in rule 5(1) of the
FDRs
.

[74]

First,
    the arbitrator referred to rule 12(5) of the
FDRs
. Rule 12(5) deals
    with incidents very similar to that in the present case. Rule 12(5) applies
    where a collision results from a driver turning left into the path of an
    oncoming vehicle.  It does not apply in this case because there was no
    collision between the two vehicles.  Under rule 12(5), the driver of the
    left-turning vehicle is 100% at fault. Although not directly applicable, rule
    12(5) provides persuasive guidance for fault determination in this case.

[75]

Second,
    the arbitrator considered s. 141(5) of the
HTA
.  Section 141(5) provides
    that a driver shall not turn left across the path of an approaching vehicle unless
    he or she has afforded a reasonable opportunity to the driver or operator of
    the approaching vehicle to avoid a collision. The arbitrator noted that Eric,
    as the left-turning driver, testified that he did not see Ali approaching the
    intersection on his motorcycle and so could not have provided him with an
    opportunity to avoid a collision. In her opinion, the fact that there was no
    collision did not take away from Erics obligations in this regard.

[76]

A
    consideration of s. 141(5) of the
HTA
led the arbitrator to the same
    fault determination as that indicated by reference to rule 12(5). Accordingly,
    the arbitrator determined that Eric was 100% at fault for the incident.

[77]

The
    arbitrators fault determination could be criticized for being insufficiently
    nuanced. However, her approach is consistent with the legislative scheme, which
    is to provide an expedient and summary method of determining fault for the
    purposes of indemnification.  As this court observed in
Jevco v. York Fire
,
    at para. 9, fault determinations under the
FDRs
are done in a gross
    and somewhat arbitrary fashion, favouring expediency and economy over finite
    exactitude.

[78]

Point
    #2  Aviva pointed to three decisions as support for its position that the
    words the ordinary rules of law mean the ordinary rules of tort law for the
    purposes of rule 5(1):
Markel Insurance Co. of Canada v. Certas Direct
    Insurance Co
., 2011 ONSC 6069;
The Germania Farmers Mutual Fire Insurance
    Co. v. Federated Insurance Company of Canada
(15 November 2006), arbitral
    award of Stephen M. Malach (Ont. Arb.); and
ING Insurance Co. of Canada v.
    Farmers Mutual Insurance Co.
, 2007 CarswellOnt 3462, [2007] O.J. No. 2150
    (S.C.).

[79]

In
    the first two cases, I agree that the decision maker applied the ordinary rules
    of tort law when allocating fault pursuant to rule 5(1).  However, neither undertook
    a statutory interpretation of the quoted words before so doing.  It appears
    that both decision makers simply assumed that the ordinary rules of law means
    the ordinary rules of tort law.  On my reading of the third decision, it does
    not apply rule 5(1) nor address how the quoted words in it are to be
    interpreted.  Thus, none of these decisions offer a reason for following a pure
    tort law approach to fault determination under rule 5(1).

DISPOSITION

[80]

For
    these reasons, I would allow the appeal and set aside the Order, thereby
    restoring the Award. I would order costs of this appeal to the appellant fixed
    at $9,000, inclusive of disbursements and applicable taxes.

[81]

In
    its factum, the appellant sought its costs, which I understand to include costs
    before the application judge and the arbitrator. In light of the result on
    appeal, the general practice in this court would be to reverse the costs award
    below. However, in the absence of submissions on this matter, I would not
    decide it. If the parties are unable to resolve the matter of the costs below,
    I would permit them to file written submissions to a maximum of three pages,
    such submissions to be filed within ten days of the date of release of these
    reasons.

[82]

As
    for the costs of the arbitration, if the parties are unable to resolve that
    matter, I would order that they be referred to the arbitrator for determination.

Released: December 24, 2015 (EEG)

Eileen
    E. Gillese J.A.

I
    agree Gloria Epstein J.A.

I
    agree L.B. Roberts J.A.


APPENDIX A:
Fault
    Determination Rules
, R.R.O. 1990, Reg. 668

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 insureds 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 DIRECTION AND LANE

6. (1) This section applies when automobile A is struck
    from the rear by automobile B, and both automobiles are travelling in the
    same direction and in the same lane.

(2) If automobile A is stopped or is in forward motion,
    the driver of automobile A is not at fault and the driver of automobile B
    is 100 per cent at fault for the incident.

Diagram


(3) If automobile A is turning, either to the right or to
    the left, in order to enter a side road, private road or driveway, the driver
    of automobile A is not at fault and the driver of automobile B is 100 per
    cent at fault for the incident.

Diagram


(4) If automobile A is in forward motion and is entering a
    parking place on either the right or the left side of the road, the driver of
    automobile A is not at fault and the driver of automobile B is 100 per cent
    at fault for the incident.

Diagram


7. (1) This section applies when automobile A collides
    with automobile B while automobile B is entering a road from a parking
    place, private road or driveway.

(2) If the incident occurs when automobile B is leaving a
    parking place and automobile A is passing the parking place, the driver of
    automobile A is not at fault and the driver of automobile B is 100 per cent
    at fault for the incident.

Diagram


(3) If the incident occurs when automobile B is entering a
    road from a private road or a driveway and automobile A is passing the
    private road or driveway and, if there are no traffic signals or signs, the
    driver of automobile A is not at fault and the driver of automobile B is
    100 per cent at fault for the incident.

Diagram


8. If automobile A collides with automobile B on a
    controlled access road while automobile B is entering the road from an
    entrance lane, the driver of automobile A is not at fault and the driver of
    automobile B is 100 per cent at fault for the incident.

Diagram


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.

Diagram


(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.

Diagram


RULES
    FOR AUTOMOBILES TRAVELLING IN THE SAME DIRECTION IN ADJACENT LANE

10. (1) This section applies when automobile A collides
    with automobile B, and both automobiles are travelling in the same direction
    and in adjacent lanes.

(2) If neither automobile A nor automobile B changes
    lanes, and both automobiles are on or over the centre line when the incident (a
    sideswipe) occurs, the driver of each automobile is 50 per cent at fault for
    the incident.

Diagram


(3) If the location on the road of automobiles A and B
    when the incident (a sideswipe) occurs cannot be determined, the driver of
    each automobile is 50 per cent at fault for the incident.

Diagram


(4) If the incident occurs when automobile B is changing
    lanes, the driver of automobile A is not at fault and the driver of
    automobile B is 100 per cent at fault for the incident.

Diagram


(5) If the incident occurs when automobile A is turning
    left at an intersection and automobile B is overtaking automobile A to pass
    it, the driver of automobile A is 25 per cent at fault and the driver of
    automobile B is 75 per cent at fault for the incident.

Diagram


(6) If the incident occurs when automobile A is turning
    left at a private road or a driveway and automobile B is overtaking
    automobile A to pass it, the driver of each automobile is 50 per cent at
    fault for the incident.

Diagram


(7) If the incident occurs when automobile A is turning
    left at a private road or a driveway and automobile B is passing one or more
    automobiles stopped behind automobile A, the driver of automobile A is not
    at fault and the driver of automobile B is 100 per cent at fault for the
    incident.

Diagram


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.

Diagram


RULES
    FOR AUTOMOBILES TRAVELLING IN OPPOSITE DIRECTIONS

12. (1) This section applies when automobile A collides
    with automobile B, and the automobiles are travelling in opposite directions
    and in adjacent lanes.

(2) If neither automobile A nor automobile B changes
    lanes and both automobiles are on or over the centre lane when the incident (a
    sideswipe) occurs, the driver of each automobile is 50 per cent at fault for
    the incident.

Diagram


(3) If the location on the road of automobiles A and B
    when the incident (a sideswipe) occurs cannot be determined, the driver of
    each automobile is 50 per cent at fault for the incident.

Diagram


(4) If automobile B is over the centre line of the road
    when the incident occurs, the driver of automobile A is not at fault and the
    driver of automobile B is 100 per cent at fault for the incident.

Diagram


(5) If automobile B turns left into the path of automobile
    A, the driver of automobile A is not at fault and the driver of automobile
    B is 100 per cent at fault for the incident.

Diagram


(6) If automobile B is leaving a parking place or is
    entering the road from a private road or driveway, and if automobile A is
    overtaking to pass another automobile when the incident occurs, the driver of
    automobile A is not at fault and the driver of automobile B is 100 per cent
    at fault for the incident.

Diagram


RULES FOR AUTOMOBILES
    IN AN INTERSECTION

13. (1) This section applies with respect to an incident
    that occurs at an intersection that does not have traffic signals or traffic
    signs.

(2) If automobile A enters the intersection before
    automobile B, the driver of automobile A is not at fault and the driver of
    automobile B is 100 per cent at fault for the incident.

(3) If automobiles A and B enter the intersection at the
    same time and automobile A is to the right of automobile B when in the
    intersection, the driver of automobile A is not at fault and the driver of
    automobile B is 100 per cent at fault for the incident.

(4) If it cannot be established whether automobile A or
    B entered the intersection first, the driver of each automobile shall be
    deemed to be 50 per cent at fault for the incident.

14. (1) This section applies with respect to an incident
    that occurs at an intersection with traffic signs.

(2) If the incident occurs when the driver of automobile B
    fails to obey a stop sign, yield sign or a similar sign or flares or other
    signals on the ground, the driver of automobile A is not at fault and the
    driver of automobile B is 100 per cent at fault for the incident.

(3) If the driver of each automobile fails to obey a stop
    sign, the driver of each automobile is 50 per cent at fault for the incident.

(4) If it cannot be established who failed to obey a stop
    sign, the driver of each automobile shall be deemed to be 50 per cent at fault
    for the incident.

(5) If, at an all-way stop intersection, automobile A
    arrives at the intersection first and stops, the driver of automobile A is
    not at fault and the driver of automobile B is 100 per cent at fault for the
    incident.

(6) If, at an all-way stop intersection, both automobiles
    arrive at the intersection at the same time and stop, with automobile A to
    the right of automobile B, the driver of automobile A is not at fault and
    the driver of automobile B is 100 per cent at fault for the incident.

(7) If it cannot be established who arrived at the all-way
    stop intersection first, the driver of each automobile shall be deemed to be 50
    per cent at fault for the incident.

15. (1) This section applies with respect to an incident
    that occurs at an intersection with traffic signals.

(2) If the driver of automobile B fails to obey a traffic
    signal, the driver of automobile A is not at fault and the driver of
    automobile B is 100 per cent at fault for the incident.

(3) If it cannot be established whether the driver of either
    automobile failed to obey a traffic signal, the driver of each automobile shall
    be deemed to be 50 per cent at fault for the incident.

(4) If the traffic signals at the intersection are
    inoperative, the degree of fault of the drivers shall be determined as if the
    intersection were an all-way stop intersection.

RULES FOR AUTOMOBILES
    IN PARKING LOTS

16. (1) This section applies with respect to incidents in
    parking lots.

(2) The degree of fault of a driver involved in an incident
    on a thoroughfare shall be determined in accordance with this Regulation as if
    the thoroughfare were a road.

(3) If automobile A is leaving a feeder lane and fails to
    yield the right of way to automobile B on a thoroughfare, the driver of
    automobile A is 100 per cent at fault and the driver of automobile B is not
    at fault for the incident.

(4) If automobile A is leaving a parking space and fails
    to yield the right of way to automobile B on a feeder lane or a thoroughfare,
    the driver of automobile A is 100 per cent at fault and the driver of
    automobile B is not at fault for the incident.

(5) In this section,

feeder lane means a road in a parking lot other than a
    thoroughfare;

thoroughfare means a main road for passage into, through
    or out of a parking lot.

RULES
    FOR OTHER CIRCUMSTANCES

17. (1) If automobile A is parked when it is struck by
    automobile B, the driver of automobile A is not at fault and the driver of
    automobile B is 100 per cent at fault for the incident.

(2) If automobile A is illegally parked, stopped or
    standing when it is struck by automobile B and if the incident occurs outside
    a city, town or village, the driver of automobile A is 100 per cent at fault
    and the driver of automobile B is not at fault for the incident.

18. The driver of automobile A is 100 per cent at fault
    and the driver of automobile B is not at fault for an incident in which
    automobile A collides with automobile B when the driver of automobile A
    fails to obey,

(a) a police officers direction;

(b) a do not enter sign;

(c) a prohibited passing sign; or

(d) a prohibited turn sign.

19. The driver of automobile A is 100 per cent at fault
    and the driver of automobile B is not at fault for an incident that occurs,

(a) when automobile A is backing up;

(b) when automobile A is making a U-turn; or

(c) when the driver of, or a passenger in, automobile
    A opens the automobile door or leaves the door open.

RULES WHEN A DRIVER IS
    CHARGED WITH A DRIVING OFFENCE

20. (1) For the purposes of this Regulation, a driver is
    considered to be charged with a driving offence,

(a) if, as a result of the incident, the driver is charged
    with operating the automobile while his or her ability to operate the
    automobile was impaired by alcohol or a drug;

(b) if, as a result of the incident, the driver is
    charged with driving while his or her blood alcohol level exceeded the limits
    permitted by law;

(c) if, as a result of the incident, the driver is
    charged with an indictable offence related to the operation of the automobile;

(d) if the driver, as a result of the incident, is
    asked to provide a breath sample and he or she is charged with failing or
    refusing to provide the sample;

(e) if, as a result of the incident, the driver is
    charged with exceeding the speed limit by sixteen or more kilometres per hour.

(2) The degree of fault of the insured shall be determined
    in accordance with the ordinary rules of law, and not in accordance with these
    rules,

(a) if the driver of automobile A involved in the
    incident is charged with a driving offence; and

(b) if the driver of automobile B is wholly or
    partly at fault, as otherwise determined under these rules, for the incident.


APPENDIX B: ADDITIONAL
    LEGISLATIVE PROVISIONS

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; (automobile)



Statutory accident benefits

268. (1) Every contract evidenced by a motor vehicle
    liability policy, including every such contract in force when the
Statutory
    Accident Benefits Schedule
is made or amended, shall be deemed to provide
    for the statutory accident benefits set out in the
Schedule
and any
    amendments to the
Schedule
, subject to the terms, conditions,
    provisions, exclusions and limits set out in that
Schedule
.  1993, c.
    10, s. 26 (1).



Liability to pay

(2) The following rules apply for determining who is liable
    to pay statutory accident benefits:

1. In respect of an occupant of an automobile,

i. the occupant has recourse against the insurer
    of an automobile in respect of which the occupant is an insured,

ii. if recovery is unavailable under subparagraph
    i, the occupant has recourse against the insurer of the automobile in which he
    or she was an occupant,

iii. if recovery is unavailable under subparagraph
    i or ii, the occupant has recourse against the insurer of any other automobile
    involved in the incident from which the entitlement to statutory accident
    benefits arose,

iv. if recovery is unavailable under subparagraph
    i, ii or iii, the occupant has recourse against the Motor Vehicle Accident
    Claims Fund.

2. In respect of non-occupants,

i. the non-occupant has recourse against the
    insurer of an automobile in respect of which the non-occupant is an insured,

ii. if recovery is unavailable under subparagraph
    i, the non-occupant has recourse against the insurer of the automobile that
    struck the non-occupant,

iii. if recovery is unavailable under subparagraph
    i or ii, the non-occupant has recourse against the insurer of any automobile
    involved in the incident from which the entitlement to statutory accident
    benefits arose,

iv. if recovery is unavailable under subparagraph
    i, ii or iii, the non-occupant has recourse against the Motor Vehicle Accident
    Claims Fund. 1993, c. 10, s. 1; 1996, c. 21, s. 30 (3, 4).



Liability

(3) An insurer against whom a person has recourse for the
    payment of statutory accident benefits is liable to pay the benefits. 1993, c.
    10, s. 1.



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. 1993, c. 10, s. 1.

Idem

(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.



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
Arbitration Act, 1991
. 2015, c. 20, Sched. 17, s. 5.



Highway Traffic Act
, R.S.O. 1990, c. H.8

Definitions

1. (1) In this Act,

motor vehicle includes an automobile, a motorcycle,
    a motor-assisted bicycle unless otherwise indicated in this Act, and any other
    vehicle propelled or driven otherwise than by muscular power, but does not
    include a street car or other motor vehicle running only upon rails, a
    power-assisted bicycle, a motorized snow vehicle, a traction engine, a farm
    tractor, a self-propelled implement of husbandry or a road-building machine;
    (véhicule automobile)



Turning at intersections

141.

Left turn, across path of approaching vehicle

(5) No driver or operator of a vehicle in an intersection
    shall turn left across the path of a vehicle approaching from the opposite
    direction unless he or she has afforded a reasonable opportunity to the driver
    or operator of the approaching vehicle to avoid a collision.



Compulsory Automobile
    Insurance Act
, R.S.O. 1990, c. C.25

Definitions

1. (1) In this Act,



motor vehicle has the same meaning as in the
Highway
    Traffic Act
and includes trailers and accessories and equipment of a motor
    vehicle; (véhicule automobile)



Compulsory automobile insurance

2. (1) Subject to the regulations, no owner or lessee of a
    motor vehicle shall,

(a) operate the motor vehicle; or

(b) cause or permit the motor vehicle to be operated,

on a highway unless the motor vehicle is insured under a
    contract of automobile insurance. 1994, c. 11, s. 383; 1996, c. 21, s. 50 (3).



Automobile Insurance
, R.R.O. 1990, Reg. 664

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;
    (assureur de première part)



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
;
    (motocyclette)



second party insurer means an insurer required under
    section 275 of the Act to indemnify the first party insurer. (assureur de
    deuxième part) O. Reg. 780/93, ss. 1, 6.

(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

.
O. Reg. 780/93, s. 1.





[1]
The
FDR
s
are set out in full
    in Appendix A to these reasons.



[2]
All legislative provisions referred to in these reasons, except the
FDRs
,
    can be found in Appendix B. The
FDR
s
are included as Appendix A.



[3]
Where the insured is the occupant of an automobile, s. 268(2) of the
Act
provides that the insured has recourse against the insurer of an automobile in
    respect of which the occupant is an insured. The definition of an automobile
    for the purposes of Part VI of the
Act
, which includes ss. 268 and 275,
    is set out in s. 224(1) of the
Act
. It includes a motor vehicle
    required under any Act to be insured under a motor vehicle liability policy.
    Section 2(1) of the
Compulsory Automobile Insurance Act
, R.S.O. 1990, c.
    C.25 prohibits, subject to certain regulations, the operation on a highway of a
    motor vehicle as defined in the
HTA
, unless the motor vehicle is
    insured. The definition of a motor vehicle in s. 1(1) of the
HTA
includes a motorcycle.



[4]
Section 9(2) of
Automobile Insurance
, R.R.O. 1990, Reg. 664, provides
    that a second party insurer insuring any class of automobile other than
    motorcycles, off-road vehicles and motorized snow vehicles is obligated under
    s. 275 of the
Act
to indemnify a first party insurer if the person
    receiving statutory accident benefits from the first party insurer is claiming
    them under a policy insuring a motorcycle.


