



COURT OF APPEAL
    FOR ONTARIO

CITATION:
Wawanesa
    Mutual Insurance Company v.
Axa Insurance (Canada), 2012 ONCA 592

DATE: 20120911

DOCKET: C54858

Weiler, Blair and Rouleau JJ.A.

BETWEEN

The Wawanesa Mutual Insurance Company

Plaintiff (Appellant)

and

Axa Insurance (Canada)

Respondent (Respondent)

Kevin D.H. Mitchell and John Bradbury, for the appellant

Linda Matthews and Laura Hodgins, for the respondent

Heard: May 17, 2012

On appeal from the judgment of Justice Susan E. Greer of
    the Superior Court of Justice, dated July 7, 2011, with reasons reported at
    (2011) 107 O.R. (3d) 395.

Weiler J.A.:

INTRODUCTION

[1]

The issue in this case is whether
    the expense of insurer generated medical assessments conducted to assess a
    claimants entitlement to benefits under the
Statutory Accident Benefits
    Schedule  Accidents on or After November 1, 1996,
O. Reg. 403/96 (the 1996
SABS
),

is recoverable under
    s. 275(1) of the
Insurance Act,
R.S.O.
    1990, c. I.8, as payments in relation to such benefits paid. For the reasons
    that follow, I hold that insurer generated medical expenses are not subject to
    indemnification under s. 275(1) of the
Insurance Act
and I would dismiss the appeal.

[2]

Section 275(1) of the
Insurance
    Act
provides that:

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 responsibility to pay the statutory accident benefits
    arose. [Emphasis added].

Thus, the insurer
    responsible for the payment of statutory accident benefits (Statutory
    Benefits) is entitled to indemnification in relation to such benefits paid by
    it from the insurers of certain classes of automobiles, including heavy
    commercial trucks.

[3]

The indemnification in s. 275(1)
    is commonly referred to as the loss transfer provision because it creates a
    mechanism to transfer the first party insurers loss (arising from the payment
    of Statutory Benefits) to the second party insurer. Indemnity is paid according
    to the respective degree of fault of each insurers insured: s. 275(2). There
    is no indemnity for the first $2000 of Statutory Benefits paid: s. 275(3).
    Disputes between insurers are resolved through arbitration under the
Arbitration
    Act, 1991
, S.O. 1991, c. 17: s. 275(4).

[4]

As of March 1, 2006, when an
    insured person submits an application for any benefit to its insurer, the
    insurer is required to pay the benefit in full within a matter of days, or, under
    s. 42 of the 1996
SABS
, have the
    insured assessed by persons chosen by the insurer who are members of a health
    profession or are social workers or who have expertise in vocational
    rehabilitation. For ease of reference, I refer to these s. 42 examinations as
    insurer generated medical assessments.

[5]

Before I provide an overview of
    the facts leading to the appeal in this case and the decisions of Arbitrator
    Samworth and Greer J. of the Superior Court, it is necessary to provide some background
    on s. 275(1) of the
Insurance Act
and its relationship to insurer generated medical assessments.

BACKGROUND: Section 275(1) of
    the
Insurance Act

(1)

Part of Ontarios no-fault auto-insurance
    scheme

[6]

Section 275(1) of the
Insurance
    Act
came into existence in June, 1990 when
    the first threshold no-fault auto-insurance scheme was introduced in Ontario under
    the
Ontario Motorist Protection Plan
(OMPP). The
Statutory Accident Benefits Schedule,
a series of regulations and schedules under the
Insurance
    Act
, governs the provision of first party
    benefits to people injured as a result of the use or operation of a motor
    vehicle.
[1]
,

[7]

As stated by this Court in
Meyer
    v. Bright
(1993), 15 O.R. (3d) 129, at
    para. 6, the amendments to the
Insurance Act
were enacted for the purpose of:

significantly limiting the right of the victim of a motor
    vehicle accident to maintain a tort action against the tortfeasor.  The scheme
    of compensation provides for an exchange of rights wherein
the accident
    victim loses the right to sue unless coming within the statutory exemptions,
    but receives more generous first party benefits, regardless of fault, from his
    or her own insurer.
The legislation appears designed to control the cost
    of automobile insurance premiums to the consumer by eliminating some tort
    claims.  At the same time,
the legislation provides for enhanced benefits
    for income loss and medical and rehabilitation expenses to be paid to the
    accident victim regardless of fault
. [Emphasis added].

[8]

The
Meyer
court also expressed the opinion, at para. 9, that
    the legislation was essentially remedial. In the words of Jennings J. in
Guardian
    Insurance Company v. Jevco Insurance Company
,
    unreported decision, November 20, 2000, at p. 2, this is remedial legislation,
    designed to get needed funds to an insured expeditiously and with a minimum of
    fuss.

[9]

From the insurers perspective, the
    legislative changes to the
Insurance Act
meant that the costs of claims would largely be
    determined by the injuries to their own insured rather than being limited to
    their insureds degree of negligence. As a result, an insurer that predominantly
    provides insurance to, say, motorcyclists, faced greatly increased costs
    because their insured are highly vulnerable to suffering injuries.  By
    contrast, the costs of an insurer that primarily insures heavy commercial
    trucks decreased because their insured are relatively less likely to suffer
    injury.  See:
State Farm Automobile Insurance Company v. Markel
    Insurance Company of Canada
, unreported arbitration
    decision of Arbitrator Samis, February 4, 2011; Bulletin No. A-11/94, Property
    & Casualty - Auto, Loss Transfer: standardized forms and procedures,
    Ontario Insurance Commission, D. Blair Tully, Commissioner, June 6, 1994, at p.
    2 (the 1994 Bulletin).

(2)

The 1992 and 1994 Interpretation
    Bulletins

[10]

The former Ontario Insurance
    Commission (now the Financial Services Commission of Ontario), issued two
    interpretation bulletins after the loss transfer provision in s. 275(1) was first
    introduced in 1990. The first bulletin, issued July 7, 1992, states that [t]he
    purpose of loss transfer is to balance the costs of no-fault benefits between
    different classes of vehicles: Bulletin No. A-9/92, Property & Casualty - Auto,
    Loss Transfer, Ontario Insurance Commission, Donald C. Scott, Commissioner,
    July 7, 1992, at p. 1 (the 1992 Bulletin).

[11]

Using a question and answer format,
    the 1992 Bulletin described the way that loss transfer should operate. One of
    the questions was: Does the second-party insurer reimburse the first-party
    insurer for loss adjustment expenses and other claims-related expenses incurred
    by the first-party insurer?  The answer was: No. Reimbursement is only made
    for the
actual benefit paid
. [Emphasis
    added].

[12]

The 1994 Bulletin was released
    following amendments to the SABS provision in s. 268 of the
Insurance
    Act
. The 1994 Bulletin introduced a Notice
    of Loss Transfer form and a Request for Indemnification form. It also used a
    question and answer format to describe how the indemnification process was
    supposed to work.  The 1994 Bulletin contains the following question and answer,
    at p. 4:

Which statutory accident benefits may be the subject of a loss
    transfer indemnification request?

First party insurers are entitled to be reimbursed for all
    accident benefit payments made under the
Statutory Accident Benefits Schedule,
subject to the $2000 deductible discussed below.  Now that the new
Schedule
is in effect, loss transfer is now available for the following kinds of
    benefits:

·

the cost of any assessment conducted under the
Schedule
;

·

the cost of services provided by a case manager related to
    the coordination of medical, rehabilitation and attendant care services; and

·

all expenses covered by the
Schedule

[13]

The new Schedule referred to in
    the 1994 Bulletin was the
Statutory Accident Benefits Schedule 
    Accidents After December 31, 1993 and Before November 1, 1996
, O. Reg. 776/93. It first introduced s. 57(1) which
    reads as follows:

The insurer shall pay for all reasonable expenses
    incurred by or on behalf of an insured person in obtaining and attending an
    examination or assessment for the purpose of this Regulation or in obtaining a
    certificate or report for the purpose of this Regulation, including,

(a)     fees charged by a person who conducts an
    examination or assessment or provides a certificate or report; and

(b)     transportation expenses incurred in attending
    an examination, including transportation expenses for an aide or attendant.

(3)

Interpretation of s. 275(1) by
    Arbitrator Ayers and Mandel J. in
Jevco


[14]

The change between the 1992 and
    1994 Bulletins led to the issue of loss transfer in relation to insurer
    generated medical assessments being raised in
Jevco Insurance
    Company v. Prudential Insurance Compa
ny,
    unreported arbitration decision of Arbitrator Ayers, Q.C., January 23, 1995, affd
    (1995), 22 O.R. (3d) 779 (Ont. Gen. Div.), by Mandel J.

[15]

Jevco took the position that the
    words in relation to in s. 275(1) are broad enough to include insurer
    generated medical assessments. If the legislature intended to restrict
    indemnification to the
actual benefits paid
to or on behalf of the insured, it would have used
    the word for instead of the phrase in relation to. Jevco argued that an
    earlier arbitration decision (which relied heavily on the 1992 Bulletin in
    holding that s. 275(1) was not intended to include insurer generated medical
    assessments) ought to be revisited in light of the 1994 Bulletin.

[16]

Jevco argued that the new Schedule
    referred to in the 1994 Bulletin did not alter the basic no-fault benefits to
    which insureds were entitled under the predecessor legislation. Rather, the
    Ontario Insurance Commission simply changed its position with respect to
    whether the costs of first-party insurer generated medical assessments were
    recoverable from the second party insurer.

[17]

On the other hand, Prudential
    argued that the 1994 Bulletin only dealt with assessments conducted at
    Designated Assessment Centres (DACs) which were to be set up around the
    province. These were the assessments referred to in s. 57 of the new Schedule.
    Unlike insurer generated medical assessments, DAC assessments were intended to
    be totally independent and for the benefit of the insured.

[18]

Arbitrator Ayers agreed with
    Prudentials position. He concluded, at p. 8, that:

Unlike section 64(5)(a) [now s. 42 of the 1996
SABS
]
    of the Schedule which contemplates an examination of the insured by a health
    practitioner of the insurers choice, the [DAC] assessments contemplated by the
    Act are to be totally independent of both the insurer and the insured and,
    presumably, of benefit to both.

[19]

The arbitrator held that the
    insurer generated assessments that Jevco was seeking reimbursement for were
    part of the insurers loss control efforts and usually of little or no benefit
    to the insured. Accordingly, he dismissed Jevcos claim for indemnification.

[20]

On appeal, Mandel J. upheld the
    arbitrators decision and dismissed Jevcos claim. Mandel J. observed that the
    insurer generated assessment is one in which the insured does not have a say. 
    While insurers are to adopt a co-operative role in the medical treatment of
    their insured, such examinations are part of loss control efforts as opposed to
    benefits administration. Such loss control efforts were never intended by the
    legislature to be indemnified and transferred to the automobile insurer.  These
    costs were not directed to the payment of no-fault benefits, but to limiting
    them.

[21]

Mandel J. acknowledged that the
    words in relation to in s. 275(1) may be very wide in scope. However, the
    apparent purpose of the provision was not to indemnify an insurer in the
    position of Jevco for insurer generated medical assessments. On
Jevcos
interpretation, an insurer would be
    entitled to the costs directly connected to the payment of Statutory Benefits,
    including overhead. Mandel J. determined that there was no connection between
    administration costs incurred for the purpose of limiting Statutory Benefits
    and the costs of Statutory Benefits paid.

[22]

Finally, Mandel J. also considered
    s. 275(3) of the
Insurance Act
.
    That section provides that there is to be no indemnification for the first $2,000
    of no-fault benefits paid. He held that it would be absurd if Jevco paid out $1,000
    in no-fault benefits and could not recover these costs but
could
claim indemnification for the entire cost of medical
    assessments. If the legislature had intended insurer generated medical assessment
    costs to be indemnified under s. 275(1) then the wording of s. 275(3) would so
    indicate.  Mandel J.s decision was not appealed.

(4)

Indemnification of insurer generated medical assessments
    since
Jevco

[23]

Following Mandel J.s decision in
Jevco
, it appears that no court decisions have dealt with
    the issue of whether indemnification can be claimed for insurer generated
    medical assessments until now. However, Between November 1, 1996 and March 1,
    2006, the question of whether the first party insurer could claim
    indemnification for the expense of a medical assessment at a DAC was raised in
    several arbitrations with decisions going both ways. For example,
Liberty
    Mutual Insurance Company v. Zurich Insurance Company
, unreported arbitration award of Arbitrator Guy
    Jones, August 23, 2005 held that, unlike insurer generated medical assessments,
    medical assessments at a DAC were not purely loss control measures and were
    recoverable; on the other hand,
State Farm Mutual Automobile
    Insurance Company v. Ing Insurance Company
,
    unreported arbitration decision of Arbitrator Brown, February 16, 2005, held that
    DAC medical assessments came within the ratio of
Jevco
and were not recoverable.

[24]

The 1996
SABS
retained the DAC features until a series of
    amendments that came into force on March 1, 2006. Following those amendments,
    DACs were abolished. Now when an insured submits an application for a benefit,
    the insurer is required, pursuant to s. 42 of the 1996
SABS
, to either pay the benefit in full within a matter of
    days, or notify the insured person that the insurer requires the insured to be
    examined.

[25]

Having set out the history of s.
    275(1) of the
Insurance Act
and
    its relationship to insurer generated medical assessments, I turn to the facts
    of this case.

OVERVIEW

(1)

Facts

[26]

In this case the appellant,
    Wawanesa Mutual Insurance Company (Wawanesa), and the respondent, Axa Insurance
    Company (Canada) (Axa), are both automobile insurers. In two separate motor
    vehicle accidents, one occurring on October 6, 2005, and one occurring on August
    21, 2006, a Wawanesa insured driver of a car was injured by an Axa insured
    driver of a heavy commercial truck. Wawanesa was responsible for paying
    Statutory Benefits to its insured drivers pursuant to the 1996
SABS
.

[27]

Axa conceded that its insured was
    100 per cent at fault in both accidents and agreed that the loss transfer
    provisions of the
Insurance Act
applied.
    Thus, Axa was required to indemnify Wawanesa for the Statutory Benefits it paid
    to its insured drivers. The issue that is the subject of this appeal concerns
    Wawanesas claim for indemnification in relation to the cost of insurer
    generated medical assessments. Axa refused to indemnify these costs on the
    basis that they were not in relation to a benefit paid to the insured.
    Pursuant to s. 275(4) of the
Insurance Act
, the dispute proceeded to private arbitration.

(2)

Arbitrator Samworths Award

[28]

After reviewing the 1996
SABS
in light of the 2006 amendments, Arbitrator Samworth
    summarized Wawanesas argument that insurer generated medical assessments were
    no longer part of expenses relating to loss control.  Wawanesa took the
    position that, as a result of the 2006 amendments to the 1996
SABS
, insurer generated medical assessments were now
    mandatory because the first party insurer was required to pay Statutory
    Benefits within a limited time or request a medical examination of the insured.
    Thus, the assessments are now part of a comprehensive scheme dealing with
    benefit entitlement.  They became a different class of expense when the DAC
    assessment process was abolished and should be recoverable under s. 275(1) of
    the
Insurance Act
.

[29]

Arbitrator Samworth found
    Wawanesas argument compelling and consistent with the 1994 Bulletin.  However,
    she held that she was bound by the decision of Mandel J. in
Jevco
and ordered that Wawanesa was not entitled to recover
    the cost of insurer generated medical assessments despite the legislative
    changes to the 1996
SABS
that
    took effect on March 1, 2006.  She concluded that, absent a concurrent change
    to Section 275 of the
Insurance Act
, which did not occur, I do not see any way around Justice Mandels
    decision and I feel I remain bound by it. Thus, whether the costs of insurer
    generated medical assessments were mandatory or optional, they were not subject
    to indemnification.

(3)

The decision of Justice Greer

[30]

Wawanesa appealed from Arbitrator
    Samworths decision to Greer J. of the Superior Court of Justice. Wawanesa
    sought a declaration that insurer generated medical assessment expenses were
    recoverable under s. 275(1) as a result of the 2006 amendments to the 1996
SABS
.

[31]

Justice Greer held that the issue
    before her was a question of law, and the standard of review was correctness.
    After summarizing  Arbitrator Samworths award and the positions of the parties,
    she dismissed the appeal. She held, at para. 23:

I see no real change in the nature and scope of the new insurer
    examinations.  Some change of wording in the Schedule is not, in my view,
    sufficient to make the substantial change in how the Act and
Schedules
and Bulletins are to be interpreted.
Jevco
,
supra
, is still
    good law and will remain so until the legislation is changed.

ANALYSIS

Standard of Review

[32]

The only issue before the court is
    the proper interpretation of s. 275(1) of the
Insurance Act
. In particular: whether the cost of insurer generated
    medical assessments are recoverable as payments made in relation to Statutory
    Benefits paid to an insured. As Greer J. observed, this issue raises a question
    of law and the standard of review is correctness. See
Dunsmuir v.
    New Brunswick
, 2008 SCC 9, [2008] 1 S.C.R.
    190, at para. 50. Thus, this court must undertake its own analysis to determine
    whether the words in relation to such benefits paid by it in s. 275(1) of the
Insurance Act
provide for first
    party insurers to be indemnified for insurer generated medical assessments. I
    set out the proper approach to this analysis below.

The Purposive Approach to
    Statutory Interpretation

[33]

The Supreme Court of Canada has consistently
    endorsed Elmer Driedgers purposive approach to statutory interpretation: see
Bell
    ExpressVu Limited Partnership v. Rex,
2002
    SCC 42, [2002] 2 S.C.R. 559, at para. 26;
Canada 3000 Inc. Re;
    Inter-Canadian (1991) Inc. (Trustee of),
2006
    S.C.C. 24, [2006] 1 S.C.R. 865, at para. 36. As Driedger explains, at p. 87 of
    his
Construction of Statutes,
2d
    ed., (Toronto: Butterworths,1983):

[T]he words of an Act are to read in their entire context and
    in their grammatical and ordinary sense harmoniously with the scheme of the
    Act, the object of the Act, and the intention of Parliament.

[34]

The purposive approach to
    statutory interpretation requires the court to take the following three steps:
    (1) it must examine the words of the provision in their ordinary and
    grammatical sense; (2) it must consider the entire context that the provision
    is located within (
Bell Expressview
, at para. 27); and (3) it must consider whether the proposed
    interpretation produces a just and reasonable result (
Bapoo v.
    Co-operators General Insurance Co.
, (1997) 36
    O.R. (3d) 616 (C.A.), at para. 8).

[35]

The factors comprising the
    entire context include the history of the provision at issue, its place in
    the overall scheme of the Act, the object of the Act itself, and the
    legislatures intent in enacting the Act as a whole and the particular provision
    at issue: Pierre-Andre Cote,
The Interpretation of Legislation in
    Canada
, 3d. ed., (Scarborough: Thomson Canada
    Limited, 2000) at p. 387.  A just and reasonable result promotes applications
    of the Act that advance its purpose and avoids applications that are foolish
    and pointless (Ruth Sullivan,
On the Construction of Statutes
, 5th ed., (Canada: LexisNexis, 2008), at p. 299).

[36]

I turn now to the application of
    the purposive approach to determine the proper interpretation of s. 275(1) of
    the
Insurance Act
.

(1)

The ordinary and grammatical
    meaning of the words

[37]

For ease of reference s. 275(1) is
    again reproduced below:

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.

[38]

As I have explained, s. 275(1)
    entitles the insurer responsible for the payment of SABS to indemnification in
    relation to such benefits paid by it from the insurers of certain classes of
    automobiles whose insured are responsible for the accident.

[39]

Here, Wawanesa, the insurer
    responsible for the payment of SABS, argues that s. 275(1) cannot be limited to
    the payment of Statutory Benefits alone. If this was what the legislature intended,
    it could simply have said that the first party insurer is entitled to
    indemnification of such benefits paid. Instead the legislature used the
    phrase in relation to such benefits paid.

[40]

I agree that the phrase in
    relation to would be superfluous if it only encompassed indemnification for the
    actual Statutory Benefits paid. For that reason, Axa does not dispute that the
    amount the insured pays for a medical assessment in support of his or her claim
    to establish entitlement to Statutory Benefits is, by virtue of s. 57 of O.
    Reg. 776/93, in relation to such benefits paid. In addition, the
    transportation expenses paid by the insured to attend a s. 57 assessment,
    including transportation expenses for an attendant to go with the claimant, are
    in relation to Statutory Benefits and subject to indemnification.

[41]

Wawanesa relies on
Nowegijick
    v. R.
, [1983] 1 S.C.R. 29, at p. 39, in
    support of its argument that the words in relation to are words of the widest
    possible scope. Thus, insurer generated medical assessments ought to be in the
    same position as medical assessments in support of an insureds claim to
    establish entitlement to Statutory Benefits under s. 57.

[42]

I have difficulty with this
    argument for two reasons: (1)
Nowegijick
involved the interpretation of a statutory income tax provision respecting
    the Crown and  Aboriginal people. That context is unique and no meaningful
    analogy can be drawn to the context that s. 275(1) of the
Insurance
    Act
is situated within; (2) the phrase in
    relation to conveys a connection between two related subjects. In my view, Statutory
    Benefits paid to an insured, and the cost of an insurer generated medical
    assessment, are not connected in the manner the appellant suggests. I explain
    each of these concerns in turn.

[43]

In
Nowegijick
, Dickson J. (as he then was) interpreted the phrase in
    respect of such property as it was used in s. 87 of the
Indian Act,
R.S.C. 1970, c. I-6.  Dickson J. rejected
    the interpretation provided in a Revenue Canada Bulletin and held that the
    wages of an Indian, earned off the reserve, were personal property and exempt
    from income tax. In so holding, he explained, at p. 36, that:

[T]reaties and statutes relating to Indians should be liberally
    construed and doubtful expressions resolved in favour of the Indians.  If the
    statute contains language which can reasonably be construed to confer tax
    exemption that construction, in my view, is to be favoured over a more
    technical construction which might be available to deny exemption.

[44]

The Supreme Court of Canada has
    underscored the importance of the
sui generis
fiduciary obligation owed by the federal Crown to
    First Nations with respect to dealings involving First Nations' lands and
    property:
Wewaykum Indian Band v. Canada
, 2002 SCC 79, [2002] 4 S.C.R. 245, at paras. 72 to 85. The presumption
    that ambiguities in statutes relating to Indians should be resolved in favour
    of Indians arises as a function of that unique relationship.

[45]

Wawanesa and Axa are not in a
    fiduciary relationship towards one another. They may owe each other a duty of
    good faith, but that does not create a presumption in favour of the insurer
    responsible for the payment of SABS. Rather, any dispute respecting
    indemnification and loss transfer is to be resolved by private arbitration
    before a neutral third party. The insurance context is distinct from the
    Aboriginal context and the broad construction of the words in respect of in
Nowegijick
cannot necessarily be imputed to the words
    in relation to at issue in this case.

[46]

My second concern relates to the connection
    between SABS paid and insurer generated medical assessments. After setting out
    the unique

context in which s.
    87 of the
Indian Act
is
    interpreted, Dickson J. held, at p. 39 that:

The words "in respect of" are, in my opinion, words
    of the widest possible scope. They import such meanings as "in relation
    to", "with reference to" or "in connection with". The
    phrase "in respect of" is probably the widest of any expression
intended
    to convey some connection between two related subject matters
. [Emphasis
    added].

[47]

Dickson J.s reasoning indicates
    that, like the words in respect of, the words in relation to are intended
    to convey some connection between two related subject matters.  In this case that
    connection must be between the Statutory Benefits paid and the cost of the insurer
    generated medical assessment.  Wawanesa argues that these two subjects are
    connected because an insurer generated medical assessment is used to determine
    if Statutory Benefits are paid to an insured. I do not think the analysis can
    stop there.

[48]

In this case the connection only
    exists if Statutory Benefits are actually paid. If Wawanesa denies Statutory
    Benefits to its insured as a result of an insurer generated medical assessment,
    it cannot seek indemnification from Axa for the cost of the assessment. This is
    true even though Wawanesa may have saved Axa a great deal of money. The
    legislature could not have intended that if the insurer generated medical assessment
    saves all of the Statutory Benefits from being paid unnecessarily, there is no
    indemnification for the cost of the assessment,
but
if the insurer generated medical assessment only
    saves some Statutory Benefits from being paid unnecessarily, there is full indemnification
    for the cost of the assessment. The supposed connection leads to an anomalous
    result.

[49]

Furthermore, the connection should
    be between insurer generated medical assessments and the Statutory Benefits
    paid by the first party insurer to

the named classes of persons,
its insured
. The cost of an insurer generated medical assessment is
    not paid to the insured. Rather, it is paid to the doctor who conducted the
    examination on behalf of the first party insurer. Again, I find that the connection
    analogy does not fit with the plain wording of s. 275(1).

[50]

In conclusion, I agree that the
    ordinary meaning of the words in relation to in s. 275(1) encompasses more
    than the Statutory Benefits paid by an insurer to its insured. However, I am
    not satisfied that those words are necessarily broad enough in scope to include
    insurer generated medical assessments. Before I reach a final conclusion on
    this point I must consider the entire context in which  the words of s. 275(1)
    are situated.

(2)

Consideration of the entire
    context

[51]

I set out much of the relevant
    context to be considered in the discussion of the background of s. 275(1) at
    the outset of my reasons. However, some further discussion is necessary.

The 1992 and 1994 Interpretation Bulletins

[52]

In this case the entire context
    includes the
Insurance Act
as
    well as the subordinate regulations and schedules. The purpose of s. 275(1) is
    an integral part of that context. Thus, regard must be had to the 1992 and 1994
    Bulletins which were issued by the body responsible for administering the
Insurance
    Act
and its regulations, and for advising
    the Minister of Finance. The Supreme Court of Canada took an analogous approach
    to resolving doubt about the meaning of a tax provision in
Placer
    Dome Canada Ltd. v. Ontario (Minister of Finance)
, 2006 S.C.C. 20., [2006] 1 S.C.R. 715, Lebel J. (writing on behalf of
    the court) observed, at para. 10, that the administrative practice and
    interpretation adopted by the Minister, while not determinative, are important
    factors to be weighed.

[53]

Wawanesa submits that the proposed
    interpretation of s. 275(1) is supported by the 1994 Bulletin. That Bulletin
    was intended to provide insurers with a clear understanding of how loss
    transfer works. It stated, at p. 4, that loss transfer is now available for
    [] the cost of any assessment conducted under the
Schedule
.


[54]

I am not persuaded by this aspect
    of Wawanesas argument for three reasons. Firstly, there are two bulletins that
    must be considered. The 1992 Bulletin states that the second-party insurer does
    not reimburse the first-party insurer for loss adjustment expenses and other
    claims-related expenses incurred by the first-party insurer. Reimbursement is
    only made for the actual benefits paid. If there was a shift in the Insurance
    Commissioners interpretation of s. 275(1) between 1992 and 1994, it may be
    reflective of ambiguity in the statute itself and, as held in
Placer
    Dome
, at para 40, cannot be relied upon as
    an interpretive tool except to support the view that the statutory definition
    falls short of being clear, precise and unambiguous.

[55]

Unlike
Placer

Dome
,
    this is not a situation where the Commissioner decided that its interpretation in
    1992 was incorrect.  Nor did it result in a change in administrative practice
    between insurers. Despite the 1994 Bulletin, the cost of insurer generated
    medical assessments has not been subject to indemnification when Statutory
    Benefits are paid, nor has it been subject to any court challenge since
Jevco
, until now.

[56]

Secondly, closer examination of
    the wording of the 1994 Bulletin does not lead to the construction Wawanesa
    wishes to place on it. There is an old saying that he who pays the piper calls
    the tune.  On Wawanesas interpretation of s. 275(1), that means the second
    party insurer who indemnifies the first party insurer ought to be able to request
    an insurer generated medical assessment for the purpose of determining whether
    an insured is entitled to continue receiving Statutory Benefits. However, the
    1994 Bulletin does not contemplate this scenario.

[57]

The 1994 Bulletin provides that
    the second party insurer should be entitled to receive: (1) a summary of Statutory
    Benefits paid in respect of a request for indemnification; and (2) basic
    information about the condition of the person receiving accident benefits. It
    was not anticipated that the second party insurer would be entitled to receive
    detailed medical and other personal information about the insured person.

[58]

Further, the 1994 Bulletin makes
    it clear that the second party insurer is not entitled to dispute the accident
    benefits payments made by the first party insurer to its insured. Rather, the
    second party insurer can only dispute the reasonableness of a payment and its
    obligation to reimburse the first party insurer for that payment.  Most
    significantly, the 1994 Bulletin contemplates first and second party insurers
    taking a co-operative approach to determining when an insurer generated medical
    assessment is necessary. It states:

A second party insurer may be more willing to pay requests for
    indemnification if it is certain that the first party insurer is employing loss
    control measures.
Second party insurers are not prohibited from reaching
    agreements with first party insurers on loss control measures and reimbursement
    for the cost of employing these measures.
However, it is the
    responsibility of the first party insurer to ensure that benefits are paid
    correctly and promptly.  The second party insurer should not be in a position
    to dictate claims handling decisions in respect of a claim where loss transfer
    applies. [Emphasis added.]

[59]

If the 1994 Bulletin contemplated
    that insurer generated medical expenses would automatically be subject to
    indemnity, there would be no need to say that first party insurers and second
    party insurers are permitted to enter into agreements for the cost of loss
    control measures.

[60]

The third reason that I reject
    Wawanesas argument respecting the 1994 Bulletin is that I understand the 1994
    Bulletin to relate indemnification for the cost of any assessment to the new
    Schedule now in effect.  The 1994 Bulletin prefaced the statement that the
    cost of any assessment is subject to indemnification by saying [n]ow that the
new
Schedule

is in effect, loss transfer is now available for the following kinds of
    benefits. Insurer generated medical assessments existed prior to the new
    Schedule. However, the new Schedule introduced s. 57 of O. Reg. 776/93 for the
    first time. As I have explained, that provision requires the insurer to pay for
    expenses incurred by the insured in attending a medical assessment to determine
    his or her entitlement to Statutory Benefits, as well as transportation
    expenses incurred in attending the assessment.

[61]

For these reasons, I am satisfied
    that the existing interpretation of the regulatory regime, which disallows
    indemnification for insurer generated medical assessments, is in accordance
    with the directions of the insurance industrys regulator as contained in the
    1992 and 1994 Bulletins.

The 2006 amendments to the 1996 SABS

[62]

Wawanesa submits that each time
    the loss transfer regulatory scheme is changed the interpretation of s. 275(1)
    of the
Insurance Act
ought to be
    re-examined. Prior to 2006, insurer generated medical assessments were
    considered a loss control mechanism. Wawanesa asserts that with the abolition
    of DACs in 2006 and other changes to the 1996
SABS
, insurer generated medical assessments became a
    mandatory component of benefit administration rather than an optional loss
    control mechanism. This constitutes a substantial change.

[63]

I would dismiss this submission
    because it is inconsistent with two principles of statutory interpretation.
    First, regulations and schedules are subordinate to the statute. If there is
    any conflict between them, the statute prevails:
Belanger v. The
    King
(1916), 54 S.C.R. 265. Thus, a change
    to the
SABS
regulatory scheme
    set up under the
Insurance Act
does not necessarily require a re-interpretation of the loss transfer
    provisions in the Act.

[64]

Second, where two reasonable
    interpretations of a statute are available and one of these would result in a
    substantial change to the law, the court will prefer the interpretation that
    does not alter the law:
Dreidger
,
    at p. 143 . I am not satisfied that the 2006 amendments to the 1996
SABS
constituted a substantial change to the
    law, thus the existing interpretation of s. 275(1) should not change. I would
    adopt Axas argument that insurer generated examinations may not have been
    explicitly mandatory prior to the 2006 amendments. However, in practice, a
    first party insurer could not terminate or deny Statutory Benefits without a
    medical opinion suggesting that the insured was no longer entitled to such
    benefits.  Despite the absence of mandatory language in the regulations and
    schedules prior to 2006, insurers who terminated benefits without a medical
    assessment faced the risk of being held to have acted in bad faith.

[65]

For these reasons, I am not
    satisfied that the interpretation of s. 275(1) with respect to first party
    insurer generated medical examinations ought to change as a result of the 2006
    amendments to the 1996
SABS
.

(3)

The existing interpretation of s.
    275(1) leads to a just and reasonable result


[66]

Wawanesa argues that the object of
    s. 275(1) is to shift the cost of paying benefits from the first party insurer
    to the second party insurer. Thus, an interpretation that allows the cost of
    insurer generated medical assessments to be indemnified furthers the object of
    the statute and produces a just and reasonable result. In addition, the only
    parties directly affected by such an interpretation are the insurers.

[67]

I disagree. Wawanesas argument ignores
    the remedial aspect of the legislation mentioned earlier at para 8, namely to
    put Statutory Benefits into the hands of an insured person as soon as possible.
    For this reason the legislation allows the cost of an insureds medical
    assessment to be indemnified pursuant to s. 57 of O. Reg. 776/93.

[68]

Contrary to the remedial aspect of
    the no-fault legislative scheme, the payment of Statutory Benefits is likely to
    be delayed if first party insurers are automatically indemnified for the cost
    of insurer generated medical assessments. In these circumstances, first party
    insurers would be more likely to seek a medical assessment of the insured, even
    in situations where it would not currently be considered necessary. With the
    abolition of DACs in 2006, a tool that was used to achieve a more co-operative
    approach to the management of the care of an insured was removed from the
    no-fault auto-insurance scheme. It would not be just or reasonable to interpret
    s. 275(1) in a manner that further diminishes the likelihood of an expeditious
    payment of Statutory Benefits to an injured insured.

[69]

By contrast, the current
    interpretation of s. 275(1) encourages agreements between first and second
    party insurers respecting the cost of insurer generated medical assessments. Wawanesa
    could face a challenge from Axa if it did not act reasonably and simply paid Statutory
    Benefits without exercising its right to an insurer generated medical
    assessment in appropriate cases. Wawanesa incurs the risk that it will not be
    indemnified for Statutory Benefits at all if it does not require an insurer
    generated medical assessment where appropriate. Thus, there is an incentive for
    Wawanesa to enter co-operative agreements with Axa to share the cost of insurer
    generated medical assessments and ensure that Satutory Benefits are paid
    appropriately. This accords with the text of the 1994 Bulletin and results in a
    real benefit to both insurers. I am satisfied that this result is both just and
    reasonable.

Conclusion

[70]

For the reasons I have given I
    would dismiss the appeal.  Section 275(1) of the
Insurance Act
does not entitle first party insurers to
    indemnification for the cost of insurer generated medical assessments.

The interpretation urged by Wawanesa does not accord
    with the ordinary wording of the provision, its history and context, or the
    rules of statutory interpretation. When the purpose of the
Insurance
    Act
as a whole is considered, the current
    interpretation of s. 275(1) produces a result that is both just and reasonable.
    I agree with Greer J. that an amendment to s. 275(1) of the
Insurance
    Act
is necessary if the cost of insurer
    generated medical assessments is to be indemnified by a second party insurer.

[71]

I would award the costs of the
    appeal to Axa and fix those costs at $10,000 on a partial indemnity basis
    inclusive of disbursements and all applicable taxes.

Karen
    M. Weiler J.A.

I
    agree Paul S. Rouleau J.A.




R.A. Blair J.A. (Dissenting):

Overview

[72]

I
    have had the opportunity of reading the draft reasons of my colleague, Justice
    Weiler.  Respectfully, I take a different view of the appeal.

[73]

My
    colleague has very carefully outlined the history and contours of Ontarios
    insurance scheme for the payment of statutory benefits to persons injured in
    automobile accidents, and for the sharing of the costs of those benefits as
    amongst insurers through what is called the loss transfer provision contained
    in s. 275(1) of the
Insurance Act
,

R.S.O. 1990, c. I.8
.  I need not repaint that picture here.

[74]

For
    convenience, though, I set out the provisions of s. 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 responsibility to pay the statutory accident benefits
    arose. [Emphasis added.]

[75]

The
    appeal raises one issue only: whether the disbursement incurred by a first
    insurer for a medical assessment conducted to gauge whether a claimant is
    entitled to benefits under the
Statutory Accident Benefits Schedule 
    Accidents on or After November 1, 1996,
O.
    Reg. 403/96 (the 1996
SABS
)
,
    is a payment made by that insurer in relation to the benefits paid to the claimant,
    when those benefits are paid.  If it is such a payment, the insurer is entitled
    to be indemnified for that payment under s. 275(1).

[76]

In
    my view it is.  I would allow the appeal for the following brief reasons.

Analysis

[77]

I
    accept the purposive and contextual approach to statutory interpretation and
    the principles to be applied in conducting that exercise, as set out by my
    colleague.  They are well-established by
Bell ExpressVu Limited Partnership
    v. Rex,
2002 SCC 42, [2002] 2 S.C.R. 559,
    at para. 26,
and the related jurisprudence.  In my view, however, the
    interpretation that I place on the words in relation to in this context is
    faithful to the modern approach.

[78]

The
    words in relation to (coupled with the words in respect of) have been held
    by the Supreme Court of Canada to be words of the widest possible scope
probably
    the widest of any expression
intended to convey some connection between
    two related subject matters (emphasis added):
Nowegijick v. R.
, [1983] 1 S.C.R. 29, at p. 39,
per Dickson J. 
    Respectfully, I do not accept, as my colleague suggests, that Dickson J. meant
    to limit his words only to the context of an aboriginal dispute over the
    payment of income tax. There is nothing in the context of his discussion of the
    issues in
Nowegijick
to suggest that was his intention.

[79]

Nor
    do I accept that there is no connection between a disbursement that the first
    insurer must now incur before it can deny payment of statutory benefits where
    entitlement may be in doubt  and, therefore, if the assessment favours the
    claimant, before it can decide to pay  and the benefits ultimately paid. 
    Clearly, there is.  The benefits would not have been paid without the
    assessment and the assessment would not have been made had the first insurer
    not paid for it.  To say that there is no connection between the expense of the
    assessment and the payment of the benefits based on the assessment is to take a
    very narrow view of the words in relation to. It is simply not consistent
    with according them the widest possible scope of meaning as called for in
Nowegijick
.

[80]

My
    colleagues approach follows that of Mandel J. in
Jevco Insurance Company
    v. Prudential Insurance Company
(1995), 22 O.R. (3d) 779 (Ont. Gen.
    Div.).  That decision was not appealed and appears to have governed the
    practice in the loss transfer payment area in the intervening years.  In it,
    Justice Mandel held that the cost of insurer generated medical assessments was
    not a benefit under the SABS Schedule but, rather, was part of the first
    insurers loss control efforts and administrative expenses and, therefore,
    not recoverable under s. 275(1).  There has been some controversy in the
    arbitration community over this result, but in the end, arbitrators have
    concluded that they were bound by the decision in
Jevco
.

[81]

In
    this case, for example, as my colleague notes, Arbitrator Samworth found the
    appellant Wawanesas argument that insurer generated medical assessments should
    be the subject of indemnification under s. 275(1) compelling.  Wawanesas
    contention was that such medical examinations are now in effect mandatory
    because, since the 2006 amendments to the 1996 SABS, the first insurer is
    required either to pay the statutory benefits within a limited period of time,
    or to request a medical examination of the insured to enable it to assess the
    claim.  The payment for the assessment is therefore part of a comprehensive
    scheme dealing with benefit entitlements rather than part of the first
    insurers loss control measures.  Arbitrator Samworth concluded, however, that
    she was bound by the decision in
Jevco
and dismissed the appellant
    Axas claim.

[82]

Respectfully,
    in my view,
Jevco
was wrongly decided.

[83]

Much
    of the analysis of Mandel J. in
Jevco
turned on his view that [t]he
    apparent purpose of the legislation is the indemnification of
benefits
    actually paid
and not administration costs (at p. 783) (emphasis added). 
    The view that the legislation encompasses indemnification only for
benefits
    actually paid
is simply incorrect, based on the clear language of s.
    275(1).  Had the legislature intended the loss transfer provisions to embrace
    only benefits actually paid, the section would provide for indemnification
for
such benefits and not for indemnification 
in relation to
 such
    benefits paid.  Indeed, my colleague accepts that the wording of s. 275(1)
    encompasses more than the actual statutory benefits paid.  What is more is a
    function of the scope of the phrase in relation to such benefits paid by it,
    and on this appeal concerns only whether it is wide enough to include the cost
    of insurer generated medical assessments.  I am satisfied that it does.

[84]

Several
    concerns appear to underlie the view that s. 275(1) encompasses only
    indemnification for actual statutory benefits paid.

[85]

First
    is the opinion expressed by Mandel J. and by my colleague that the disbursement
    incurred for an insurer generated medical assessment is a component of that
    insurers administrative costs and part of its loss control efforts, and
    therefore not something that is related to the payment of no-fault statutory
    benefits.  While I agree that the legislature did not intend that the first
    insurer be reimbursed for its general overhead and administrative costs, I do
    not think it follows that characterizing the cost of insurer generated medical
    assessments in this fashion necessarily leads to the conclusion that the
    disbursement is not made in relation to [the statutory] benefits paid by it.

[86]

A
    thing or concept may stand in relation to more than one thing or concept.  As
    a simple example, the spokes on a wheel are situated in relation to the hub
    of the wheel, but they are also situated in relation to the rim.  Here, the
    issue is not whether the disbursement for the insurer generated assessment is a
    payment made in relation to the first insurers loss control efforts, or even
    to its administrative costs in a broad sense. The issue is whether the payment
    is made in relation to the statutory benefits paid.  One does not preclude
    the other, in my view.

[87]

Second
    is the view that permitting the first insurer to be indemnified under s. 275(1)
    for the expense of an insurer generated medical assessment would contravene the
    purpose of the loss transfer provisions by shifting a broad range of
    administrative costs to the second insurer.  To the extent that such a
    disbursement may form part of the first insurers administrative costs, in a
    broad sense, it remains a discrete, specific expense related to the particular
    claim at issue and therefore falls within the parameters of the indemnification
    provided by s. 275(1), in my view.  I do not think there is a bright line
    between administrative costs and [statutory] benefits paid.

[88]

Third
    is the suggestion underlying the reasons in
Jevco
and those of my
    colleague that indemnification of the first insurer under s. 275(1) is limited
    to payments that are made by or on behalf of the insured and cannot encompass
    payments made by the first insurer, in effect on its own behalf, to satisfy
    itself that the benefits ought to be paid.  If that view were correct, however,
    the legislature would have used the words indemnification in relation to such
    statutory benefits paid
to or on behalf of the insured
.  It did not.

[89]

In
    terms of a payment made in relation to a statutory benefit paid, I see no
    difference in principle between the cost of an
insurer
generated
    medical assessment, the cost of an
insured
generated medical
    assessment, and the cost of a mandatory DAC assessment under the former regime.
    It is accepted that the first insured is entitled to indemnification for the
    latter two.  Yet all are equally obtained for the purpose of assessing whether
    the insured is, or is not, entitled to the statutory benefits claimed and the
    extent of those benefits.

[90]

There
    is no doubt that the no-fault regime enacted under the
Insurance Act
constitutes remedial legislation, designed to get needed funds to an insured
    expeditiously and with a minimum of fuss, as Jennings J. so succinctly put it
    in
Guardian Insurance Company v. Jevco Insurance Company
,
(20 November 2000), 00-CV-197938, at p.2.  The
    issue raised on this appeal does not truly evoke the remedial nature of the
    legislation, however.  It brings into play a contest between two insurers as to
    how the loss provisions are to be shared.  The purpose of those provisions is simply
    to spread the cost of the payment of no-fault benefits between the insurers of
    different classes of vehicles in a more even-handed manner, and to do so in a
    way that does not interfere with the expeditious payment of statutory benefits
    to the injured insured.  I am satisfied that indemnifying the first insurer for
    the cost of an insurer generated medical assessment is completely consistent
    with the purpose of the loss transfer scheme.

[91]

Much
    was made in argument over the differences between the 1992 and 1994
    Interpretation Bulletins issued by the Ontario Insurance Commission regarding
    the loss transfer provision in s. 275(1).  I do not think they are particularly
    helpful in deciding the correct interpretation of the words in relation to in
    that provision, however.

[92]

In
    the 1992 Bulletin, the Commission stated that reimbursement was to be made only
    for the actual [statutory] benefits paid: Ontario Insurance Commission,
Property
    & Casualty  Auto, Loss Transfer
, Bulletin
    No. A-9/92 (6 July 1992) at p. 2 (Commissioner: Donald C. Scott).
This
    interpretation is simply wrong for the reasons I have articulated.  Whatever
    ambiguity there may be in the words in relation to, it is perfectly clear
    that they do not confine the indemnification only to the actual benefits
    paid.  Otherwise the legislature would have used the word for rather than
    the phrase in relation to.  As noted above, my colleague recognizes this.

[93]

In
    the 1994 Bulletin  after certain amendments had been made to the SABS regime 
    the Commission stated that loss transfer was now available, amongst other
    things, for the cost of
any
assessment conducted under the Schedule (emphasis
    added), presumably including an insurer generated medical assessment: Ontario
    Insurance Commission,
Property & Casualty  Auto, Loss Transfer
,
    Bulletin No. A-11/94 (6 June 1994) at p. 4 (Commissioner: D. Blair Tully) (the
    1994 Bulletin).  The wording of s. 275(1) had not changed, however.

[94]

While
    I agree that the administrative practice and interpretation adopted by a
    responsible agency may be factors for consideration in interpreting legislative
    provisions  see
Placer Dome Canada Ltd. v. Ontario (Minister of Finance)
,
    2006 SCC 20, [2006] 1 S.C.R. 715, at para. 10  I do not see how they can be of
    much assistance when the agency has taken completely opposite interpretations
    of the same wording in the legislation on different occasions.

[95]

Finally,
    I do not think that the new Schedule referred to in the 1994 Bulletin is
    determinative of the issue here.  In my opinion  while it may have reinforced
    the mistaken view that indemnification was intended only for payments made by
    or on behalf of the insured  the new Schedule has little bearing on whether
    the indemnification provision in s. 275(1) of the
Insurance Act
encompasses
    the payment of insurer generated medical assessments.

[96]

Section
    57(1) of the new Schedule rearticulated the first insurers obligation to
    reimburse its insured by providing that the insurer pay all reasonable
    expenses
incurred by or on behalf of an insured person
in obtaining
    and attending an examination  including, (a) fees charged by a person who
    conducts an examination or assessment or provides a certificate or report
    (emphasis added).  Section 57(1) provides for obligations as between the first
    insurer and its insured, however; it does not address whether a medical
    assessment generated by the first insurer, essentially on its own behalf, for
    the purpose of determining whether to pay the benefit in question is a payment
    made in relation to that benefit when paid.  In that regard, I do not think
    that Greer J. erred in determining that the change in the new Schedule was not
    sufficient to drive a different interpretation respecting indemnification for
    the insurer generated medical assessment.  Section 57(1) simply does not deal
    with that question.

Disposition

[97]

For
    all of the foregoing reasons, I would allow the appeal and vary the Order of
    Greer J. dated July 7, 2011, to grant the appeal from the arbitration award of
    Arbitrator Samworth. I would remit the matter to the Arbitrator to determine
    the quantum of the insurer generated medical assessments in question, with the
    direction that Wawanesa is entitled to be indemnified for the expenses of such
    medical assessments paid by it in relation to the statutory benefits that it
    has paid to its insured pursuant to s. 275(1) of the
Insurance Act
.

[98]

I
    would award the costs of the appeal to the appellant, fixed in the amount of
    $10,000, inclusive of disbursements and all applicable taxes.

Released: Sept. 11, 2012                                                          R.A.
    Blair J.A.

KMW





[1]
At present there are four different
Statutory Accident Benefits Schedules
in
    place governing different time periods:
Statutory Accident Benefits Schedule
     Accidents After December 31, 1993 and Before November 1, 1996
, O. Reg.
    776/93;
Statutory Accident Benefits  Schedule  Accidents Before January 1,
    1994
, R.R.O. 1990, Reg. 672;
Statutory Accident Benefits Schedule
    Accidents on or after November 1, 1996
, O. Reg. 403/96 (the 1996
SABS
);
Statutory Accident Benefits Schedule  Effective September 1, 2010
, O.
    Reg. 34/10.


