



COURT OF APPEAL FOR ONTARIO

CITATION: Ontario (Finance) v. Echelon General Insurance
    Company, 2019 ONCA 629

DATE: 20190725

DOCKET: C66144

Lauwers, Fairburn and Nordheimer JJ.A.

In
    the Matter of an Arbitration under the
Arbitration Act
, 1991
,
    S.O. 1991, c. 17,

the
Insurance Act
R.S.O. 1990. c.I.8, as amended, Ontario Regulation
    283/95, and the
Motor Vehicle Accident Claims Fund Act
, R.S.O. 1990
    c.M.41

BETWEEN

Her Majesty the Queen
    in right of Ontario,

as represented by the
    Minister of Finance

(the Motor Vehicle
    Accident Claims Fund)

Applicant/Respondent
(Respondent)

and

Echelon General Insurance Company

Respondent/Appellant
(Appellant)

Jamie R. Pollack and Erica Lewin, for the appellant

Marie Sydney, for the respondent

Heard: June 14, 2019

On appeal from the order
    of Justice Thomas R. Lederer of the Superior Court of Justice, dated August 8,
    2018, with reasons reported at 2018 ONSC 4550.

Lauwers J.A.:

[1]

Anne Louise Barnes was a passenger on a snowmobile operated by her
    boyfriend Frazer Bird when she was thrown off and suffered injuries. Mr. Bird
    was a named insured under an automobile insurance policy issued by Echelon
    General Insurance Company. Ms. Barnes applied to Echelon for statutory accident
    benefits. Echelon began paying her benefits as required by s. 2 of
Disputes
    Between Insurers
, O.

Reg. 283/95 (the Regulation), enacted
    under the
Insurance Act
, R.S.O. 1990, c. I.8. However, Echelon soon
    decided that it was not liable because the snowmobile was not a described
    vehicle under Mr. Birds policy. In reality, the snowmobile was insured under the
    other automobiles section of the policy.

[2]

In the mistaken belief that Ms. Barnes was not covered by its insurance
    policy, but was uninsured, Echelon persuaded the Motor Vehicle Accident Claims
    Fund to accept the payment obligation. Echelons coverage mistake eventually
    came to light and the Fund requested Echelon to resume paying Ms. Barnes, and
    to reimburse it for payments made to her. Echelon refused.

[3]

The Fund and Echelon arbitrated their dispute under the provisions of the
    Regulation. The arbitrator found that Echelon, not the Fund, was obliged to pay
    the benefits to Ms. Barnes. The appeal judge agreed that Echelon was obliged to
    pay the benefits.

[4]

Echelon appeals to this court with leave. I would dismiss the appeal,
    for the following reasons.

A.

THE ISSUE

[5]

The overarching issue is whether responsibility for paying statutory
    accident benefits to Ms. Barnes lies with Echelon or the Fund.

[6]

It is common ground that Echelon was mistaken in transferring its
    responsibility for paying Ms. Barnes benefits to the Fund because under the other
    automobiles section of Mr. Birds insurance policy with Echelon, the
    snowmobile was expressly insured: motorized snow vehicle is included in the
    definition of automobile; and [a]utomobiles, other than a described
    automobile, are also covered when driven by [the insured]. Ms. Barnes was
    therefore an occupant of an insured vehicle at the material time, and Echelon
    was the priority insurer for the payment of statutory accident benefits.

[7]

Despite its own error, Echelon argues that the Fund lost its ability to
    contest priority once the Fund accepted responsibility for paying benefits to
    Ms. Barnes. Arbitral jurisprudence holds that an insurer that accepts priority
    cannot later resile except in unusual circumstances that do not exist here. Echelon
    asserts that the Fund is an ordinary insurer and is bound by this
    jurisprudence.

B.

THE DECISIONS OF THE ARBITRATOR AND THE APPEAL JUDGE

[8]

In an unreported decision dated August 29, 2017, the Arbitrator Scott
    Densem determined that Echelon was the priority insurer responsible for paying
    benefits to Ms. Barnes. The arbitrator found in the Funds favour in
    comprehensive reasons. He determined that the Regulation did not on its own
    provide a remedy by which the Fund could be reimbursed. In his view, his
    authority under s. 7(6) of the Regulation to make a special award did not
    permit him to order Echelon to reimburse the Fund. However, he found he had authority
    to make such an order under s. 31 of the
Arbitration Act, 1991
, S.O.
    1991, c. 17, which provides: An arbitral tribunal shall decide a dispute in
    accordance with law, including equity, and may order specific performance,
    injunctions and other equitable remedies. The arbitrator found that principles
    of both unjust enrichment and contract law permitted him to order Echelon to
    reimburse the Fund.

[9]

The appeal judge dismissed Echelons appeal of the arbitrators award
    but did not accept the arbitrators analysis. Instead the appeal judge found
    that Echelons failure to conduct a reasonable investigation was fatal to its
    notice to require the Fund to pay benefits to Ms. Barnes. The appeal judge
    noted that s. 3.1 of the Regulation requires an insurer to conduct a
    reasonable investigation before submitting notice of a priority dispute to
    the Fund. He accepted the arbitrators finding that Echelon did not conduct a
    reasonable investigation because it had failed to read its own policy. In the
    absence of proper notice, the appeal judge found there was no dispute that
    could be subject to arbitration, rendering the arbitration void from the
    outset.

C.

THE STANDARD OF REVIEW

[10]

Several
    decisions of this court have concluded that the standard of review for a
    question of law determined by an arbitrator in the statutory accident benefits
    regime is presumptively reasonableness:
The Dominion
    of Canada General Insurance Co
mpany v.
Unifund Assurance Company
, 2018 ONCA 303, 25
    M.V.R. (7th) 91, at para. 35, per van Rensburg J.A., leave to appeal refused,
    [2018] S.C.C.A. No. 199;
Intact Insurance
    Company v. Allstate Insurance Company of Canada
, 2016 ONCA 609, 131
    O.R. (3d) 625, at para. 53, per LaForme J.A.; and
The Dominion of Canada
    General Insurance Company v. State Farm Mutual Automobile Insurance Company
,
    2018 ONCA 101, 141 O.R. (3d) 129, at para. 44, per Roberts J.A. That said,
    there are occasions on which there is only one reasonable answer to a question
    of law:
McLean v. British Columbia (Securities Commission)
[2013
    S.C.R. 895, at para. 38, David Stratas, The Canadian Law of Judicial Review: A
    Plea for Doctrinal Coherence and Consistency, (2016) 42 Queens Law Journal
    27, at p. 46-47.

D.

ANALYSIS

[11]

I
    begin by setting out how the Regulation is to be interpreted and implemented in
    light of the legislation and the jurisprudence.

(1)

Purposes of the Regulation

[12]

The
    first purpose of the Regulation, which came into effect in May 1995, is to
    ensure that injured persons receive accident benefits promptly, despite any
    disputes between insurers over who should pay these benefits:
Allstate Insurance Company of Canada v. Motor Vehicle
    Accident Claims Fund
,
2007 ONCA 61, 84 O.R. (3d) 401, at para. 24, per Laskin
    J.A. (
Allstate
). This flows from the obligation imposed by s. 2 of
    the Regulation: the first insurer that receives a completed application for
    benefits is responsible for paying benefits to an insured person pending the
    resolution of any dispute as to which insurer is required to pay benefits.

[13]

The
    second purpose of the Regulation identified by Laskin J.A. is to provide for
    the resolution of insurer disputes by arbitration under the
Arbitration Act, 1991

: at para. 25.

[14]

Another
    purpose of the scheme is to ensure that the Fund is the funder of last resort,
    liable to pay statutory accident benefits with public money only if there is no
    private insurance available for that purpose. The expenditure of public funds
    should be guarded carefully and the entitlement clearly established. As Laidlaw
    J.A. observed in respect of the predecessor fund, in
Sinclair v.  Woodward
, [1951] O.J. No. 304
    (C.A.), at para. 5:

Therefore, much care and vigilance
    is required before the Court can be satisfied that the conditions of the
    statute have been fulfilled, or before dispensing with the necessity for
    complying with any of the statutory requirements in a particular case. Every
    provision of the Act designed for protection of the fund should be given full
    consideration and effect.

[15]

To
    that end, while the Fund is intended to be treated as an insurer for many
    purposes, the Regulation, as amended by Ontario Regulation 38/10, contains
    substantial protections for the Fund.

[16]

I
    agree with the observations of Arbitrator Bialkowski in
Royal & SunAlliance Insurance Co. and State Farm
    Mutual Automobile Insurance

Co.,
    Re
,
2016 CarswellOnt 13322 (Arbitration), that the purpose of the 2010 amendments
    was to provide additional protections to the Fund. The investigation obligation
    in s. 3.1 was added to protect the Fund from what is commonly known as dumping.
    Dumping occurs when the insurer receives a claim for benefits and, rather
    than incurring the time and expense of its own priority investigation,
    immediately places the Fund on notice thereby forcing the Fund to complete a
    reasonable investigation to determine if another insurer stands in priority: at
    para. 25. Arbitrator Bialkowski identified another protective purpose in s.
    2.1(7), which provides the Fund with protection against deflection. He also
    noted that the purpose of [subsection] 3(1.1) was to prevent what counsel for
    the Fund describe[d] as blindsiding, that is involving the Fund at a late
    stage: at para. 37.

[17]

The
    legislation must be read with these principles and purposes in mind.

(2)

Reading the Legislative Language

[18]

Under
    s. 2.1 of the Regulation, the individual claiming statutory accident benefits
    must notify the insurer that he or she wishes to apply for benefits: at s.
    2.1(2). The insurer is obliged to promptly provide an application and any
    other appropriate forms to the applicant. The Fund can be an insurer under s.
    2.1. This possibility is reinforced by the language of s. 4(2). If the Fund is
    [t]he first insurer that receives a completed application for benefits from
    the applicant, then it shall commence paying the benefits: at s. 2.1(6).

[19]

However,
    if the first insurer to receive a completed application disputes priority under
    s. 268 of the
Insurance Act
, then the procedure set out in s. 3(1) of
    the Regulation applies. The insurer must give written notice within 90 days of
    receipt of a completed application for benefits to every insurer who it claims
    is required to pay under that section: at s. 3(1). The notice must also be
    given to the Fund if the insurer claims the Fund is required to pay benefits:
    at s. 3(1.1). It is notable that the requirement to give notice within 90 days
    does not apply to the Fund if it is disputing priority, nor does an insurer's
    obligation to make reasonable investigations necessary to determine if another
    insurer was liable within the 90-day period, which is imposed under s. 3(2)(b),
    apply to the Fund. This is the result of s. 3(2.1), which provides:

If the dispute relates to an
    accident that occurred on or after September 1, 2010, the Fund may give a
    notice under subsection (1) after the 90-day period and is not required to
    comply with subsection (2).

[20]

Section
    3.1 of the Regulation imposes a burden on an insurer claiming that the Fund is
    required to pay benefits. Subsection 3.1(2) provides:

Before giving a notice to the Fund under section 3, an insurer
    must,

(a)

complete a reasonable investigation to determine if any other insurer or
    insurers are liable to pay benefits in priority to the Fund; and

(b)

provide particulars to the Fund of the investigation and the results of
    the investigation.

[21]

If
    the dispute between the insurers, or between an insurer and the Fund, cannot be
    resolved, s. 7 specifies that the dispute proceeds to arbitration under the
Arbitration Act, 1991
. Under s. 7(1), the
    arbitration is initiated by the insurer paying benefits, or any other insurer
    against whom the obligation to pay benefits is claimed. Subsection 7(3)
    provides that the arbitration may be initiated no later than one year after
    the day the insurer paying benefits first gives notice under section 3, but
    this time limit does not apply to the Fund. Subsection 7(4) states that the
    arbitration may be initiated by the Fund at any time before or after the expiry
    of the time limit set out in subsection (3) if the Fund is paying benefits.

[22]

The
    remedial section of the Regulation is s. 7(6), which provides:

If the dispute relates to an
    accident that occurred on or after September 1, 2010, the failure of an insurer
    other than the Fund to comply with section 2.1 or 3.1 may be the subject of a
    special award made by the arbitrator.

[23]

Taking
    ss. 3.1, 3(2.1) and 7 together, in my view it is clear that the Fund may
    dispute its obligation to pay benefits at any time and need not initiate an
    arbitration within one year of the time that it first began paying benefits.
    The arbitrator has authority to grant a remedy where one is warranted.

[24]

Since 2007 there has been no doubt that the Fund is an
    insurer under the Regulation. This court decided two companion decisions
    sitting in a panel of five in
Kingsway
    General Insurance Company v. Ontario
, 2007 ONCA 62,
84 O.R. (3d)
    507 (
Kingsway
),
and
Allstate
. The panel was convened because of an earlier decision of
    the court,
Kalinkine v.
    Superintendent of Financial Services Commission (Ont.) et al.
(2004), 193 O.A.C. 77 (C.A.), in
    which the court found that the Fund is not an insurer for the purpose of the
Insurance Act
or the Regulation.

[25]

In
Kingsway
and
Allstate
this
    court concluded, as expressed at para. 52 of
Allstate
,

that

Kalinkine
was wrongly decided and that the Fund is an insurer under regulation 283.
    Justice Laskin stated in
Allstate
, at para. 37:

Literally, of course,
    the Fund is not an insurer. Insurer is defined in the
Insurance Act
to mean a person who undertakes or agrees or offers to undertake a
    contract. The Fund does not meet this definition. However, in the
    interpretation of statutes or regulations, the literal or ordinary meaning of a
    word is not always determinative. See
Chieu
[
Chieu v. Canada (Minister of Citizenship and Immigration)
,
2002 SCC 3,
[2002] 1 S.C.R. 84
]
,
supra
, at para. 34. That is because its meaning flows, at
    least partly, from the statutes, or in this case the regulations, context and
    purpose. Interpreted in this light, I conclude that the Fund is an insurer for
    the purpose of resolving disputes over the payment of accident benefits. Both
    the overall context and purpose of the legislative and regulatory scheme, and
    the immediate context, the wording of regulation 283, support this conclusion.

[26]

As Laskin J.A. pointed out, the
    treatment of the Fund is entirely contextual. Context applies to any
    consideration of whether precedents relating to disputes between insurers apply
    in whole or in part to the Fund, particularly in light of the 2010 amendments
    to the Regulation. I observe that these amendments followed the 2007 decisions
    in
Kingsway
and
Allstate.
Regulation 38/10
    amended the Regulation to separate out more distinctly the Fund from other
    insurers and to add protections for the Fund, as the detailed analysis of the
    new provisions set out earlier amply shows.

(3)

The Emergent Issues

[27]

The
    reasons of the arbitrator and the appeal judge, and the arguments put forward
    by the parties, raise the following issues, to which I now turn:

·

Was the appeal judge correct in holding that the arbitration was
    void from the outset?

·

Does the arbitral jurisprudence bind the Fund in a priority
    dispute?

·

Was the arbitrators interpretation of s. 7(6) of the Regulation
    reasonable?

(a)

Was the appeal judge correct in holding that the arbitration was void
    from the outset?

[28]

In
    my view the appeal judge was not correct in concluding that the arbitration was
    void from the outset.

[29]

I
    begin the analysis with the arbitrators award. When he refers to HMQ he is
    referring to the Fund. He made the following findings and orders:

1.

HMQ is permitted to withdraw from its agreement to accept priority for
    the claimant SABS [statutory accident benefits] claim.

2.

Echelon is the priority insurer pursuant to section 268 (2) of the
Insurance
    Act
, and, if the claim remains open, has the responsibility to continue
    handling the claimants SABS claim.

3.

HMQ is entitled to restitution from Echelon of any monies HMQ has paid
    to Echelon, and monies paid to or on behalf of the SABS claimant, Anne Louise
    Barnes.

4.

HMQ, as the successful party in this arbitration, is entitled to recover
    its costs from Echelon, including its share of the Arbitrator's fees and
    disbursements already paid or payable.

These terms would entirely resolve the issues between
    Echelon and the Fund. An order of this type is contemplated by the Regulation.

[30]

The
    appeal judge was not correct in concluding that the arbitration was void from
    the outset, for two reasons.

[31]

First,
    the appeal judge clearly thought the appeal should be dismissed. But by basing
    his reasoning on a finding that the arbitration was void from the outset, the appeal
    judge nullified the arbitration award. If the arbitration was void, it is unclear
    on what basis the Fund could obtain the remedy it seeks and to which it is
    entitled.

[32]

Second,
    there is no doubt that the arbitration was properly initiated by the Fund and
    duly constituted. The arbitrator had the authority given to him by the
    Regulation and the
Arbitration Act, 1991
to resolve the issues
    confided to him. There is nothing in the text of the amended Regulation or in
    the
Insurance Act
that compels
    or could even justify the result of voiding the arbitration award. Quite to the
    contrary, s. 7(6) of the Regulation addresses precisely the situation in which
    an insurer fails to comply with s. 3.1, including the insurers failure under
    s. 3.1(2) (a) to complete a reasonable investigation to determine if any other
    insurer or insurers are liable to pay benefits in priority to the Fund.

[33]

This
    conclusion leads me back to the arbitration decision. Was it reasonable?

(b)

Does the arbitral jurisprudence bind the Fund in a priority dispute?

[34]

Echelon
    submits that the basic policy thrust of the Regulation is to permit summary and
    relatively quick arbitrations aimed at supporting certainty, simplicity and efficiency,
    as this court noted in
Kingsway General Insurance Co. v. West Wawanosh
    Insurance Co.
(2002), 58 O.R. (3d) 251 (C.A.) (
West Wawanosh
).
    The Fund is an insurer for the purposes of the Regulation, as this court found
    in
Kingsway
and
Allstate
. Accordingly, the ordinary rules
    of arbitration apply to the Fund. In particular, Echelon asserts that the
    invariable rule is that once an insurer accepts priority, the insurer is not
    permitted to resile from that acceptance unless the arbitrator can be persuaded
    that the acceptance of priority was a result of misrepresentation or bad faith
    on the part of the other insurer. Since there is no evidence in this case of
    bad faith or misrepresentation on the part of Echelon, once the Fund accepted
    priority, arbitral jurisprudence dictates that it is bound by the decision and
    cannot resile. Echelon asserts that nothing in the 2010 amendments to the
    Regulation undermine this approach.

[35]

Echelon
    relies heavily on this courts 2002 decision in
West Wawanosh
, which
    involved whether the limitation period in s. 3(1) of the Regulation could be
    avoided in light of a subsequent change in jurisprudence interpreting the
    relevant statutory provisions. Sharpe J.A. stated, at para. 10:

The Regulation sets out in precise
    and specific terms a scheme for resolving disputes between insurers. Insurers
    are entitled to assume and rely upon the requirement for compliance with those
    provisions. Insurers subject to this Regulation are sophisticated litigants who
    deal with these disputes on a daily basis. The scheme applies to a specific
    type of dispute involving a limited number of parties who find themselves
    regularly involved in disputes with each other. In this context, it seems to me
    that clarity and certainty of application are of primary concern. Insurers need
    to make appropriate decisions with respect to conducting investigations,
    establishing reserves and maintaining records. Given this regulatory setting,
    there is little room for creative interpretations or for carving out judicial exceptions
    designed to deal with the equities of particular cases.

[36]

Echelon
    argues that the arbitral jurisprudence has built on this reasoning to sharply
    limit the discretion of arbitrators to permit insurers to resile from an
    acceptance of priority. A representative holding is that of Arbitrator Guy
    Jones in
Motors Insurance Co. v. Co-operators
    Insurance Co.
,
    2004 CarswellOnt 10976
(Arbitration), at para. 19:

While this decision [
West
    Wawanosh
] involved an Interpretation of the section 3 notice provisions of Regulation
    283/95, I am of the opinion that the same principles apply to the matter that
    we are dealing with at this time. The parties have entered into an agreement as
    to who is to pay the accident benefits. While I accept that in the proper
    circumstances, an arbitrator can exercise his equitable powers to intervene and
    allow a party to withdraw from an agreement, this should only occur in the most
    extreme cases. In a scheme where certainty, simplicity and efficiency are
    important, allowing one party to revoke a previous agreement simply because
    they may later become aware of new facts is not desirable. To allow such an
    approach would be to encourage parties to change their positions each time they
    obtained new facts, something which is clearly contrary to the Intent of the
    Regulation.

[37]

The
    arbitrator considered a number of other arbitral cases put forward by Echelon,
    including
AXA Insurance Co. of Canada and Ontario
    (Minister of Finance), Re
, 2008 CarswellOnt 11418
(Arbitrator: M. Guy
    Jones);
Enterprise Rent A Car and ING
    Insurance Co. of Canada, Re
, 2006 CarswellOnt 11716
(Arbitrator: M. Guy Jones);
    and
Aviva Insurance Co. of Canada and State
    Farm Insurance Co., Re
, 2012 CarswellOnt 17684
(Arbitrator: Shari L. Novick).

[38]

The
    arbitrator noted, at p. 54, that none of these cases involved the Fund or s.
    3.1 of the Regulation. He added, at p. 55: I am of the view that there is
    insufficient legal foundation for such a severe narrowing of the circumstances
    in which an insurer may withdraw an agreement to accept priority  especially
    considering the section 3.1 amendment to the priority dispute regulation for
    cases involving HMQ.

[39]

The
    arbitrator considered, at p. 61, whether it would be unjust to allow the Fund
    to withdraw its agreement to accept priority and to require Echelon to make
    restitution of monies paid by the Fund, because Echelon detrimentally changed
    its position or its circumstances in reliance upon HMQs decision. He
    concluded, at p. 63, that there was no real prejudice to Echelon apart from
    having to pay, which was simply the consequence of righting the wrong which ha[d]
    occurred, and essentially putting Echelon back in the position [of] priority
    insurer  a position in which it should have remained according to the facts and
    law of this case. The appeal judge addressed the arbitral jurisprudence. He
    noted, at para. 21:

The Fund stands apart. I point out
    that for all the cases referred to on behalf of Echelon as demonstrating that
    an insurer, having accepted liability (priority), cannot step away from that
    acceptance, none concern the involvement of the Fund. They are all disputes
    between insurers save one which has no application to the issues raised by
    this case.

[40]

The
    appeal judge, at paras. 39 and 40, endorsed as reasonable the arbitrators view
    expressed at p. 44 of his reasons:

[I]n cases involving HMQ, the bad
    faith and deliberate misrepresentation analysis as it may relate to what
    documentation/information has or has not been provided to HMQ has no
    application after the September, 2010 priority dispute regulation amendments,
    if indeed it ever had appropriate application for this kind of an issue in a
    priority dispute.

[41]

The
    appeal judge considered the amendments to be determinative: at para. 39. He
    did not consider it necessary for the arbitrator to consider and reject the
    arbitral jurisprudence on a broader basis.

[42]

The
    Fund is not an ordinary insurer, as Laskin J.A. noted in
Allstate
. And
    the Fund is not an ordinary insurer in a priority dispute under the Regulation,
    as the 2010 amendments make abundantly clear. I agree with the arbitrator and
    the appeal judge that even though the Fund is an insurer for some purposes, it
    stands apart from ordinary insurers in priority disputes under the Regulation.
    The arbitrator did not err in refusing to apply the arbitral jurisprudence to
    the Fund in this instance.

(c)

Was the arbitrators interpretation of s. 7(6) of the Regulation
    reasonable?

[43]

Subsection
    7(6) of the Regulation provides that in a dispute that is being arbitrated,
    the failure of an insurer other than the Fund to comply with section 2.1 or
    3.1 may be the subject of a special award made by the arbitrator.  The
    arbitrator found that s. 7(6) of the Regulation did not give him remedial
    authority to order Echelon to resume payments of statutory accident benefits to
    Ms. Barnes and to reimburse the Fund for payments it had made to her: [T]he special
    award remedy referred to in section 7 (6) ought not to be used by itself to
    essentially determine the merits of the priority dispute before me (at p. 30).
    He added, at p. 31:

Instead, in my view a special
    award under s. 7 (6) is to be considered in the form of a costs type of
    sanction if I deem it appropriate for Echelons failure to comply with the
    terms of section 3.1, and
provided
I find HMQ otherwise successful on
    the merits of its claim. [Emphasis in original.]

[44]

In
    his discussion of the jurisdiction to make a special award, the arbitrator
    referred to s. 282(10), found in a previous version of the
Insurance Act:
at p. 26. Subsection
    282(10) followed a heading entitled, Special award. As he noted, that section
    authorized an arbitrator who found that the insurer had unreasonably withheld
    or delayed statutory accident benefits payments to a claimant, to award the
    claimant up to an additional 50% of the amount to which the claimant was
    otherwise entitled. The arbitrator observed:

In effect this was a punishment for
    insurer bad behaviour and a deterrent against future bad behaviour. Obviously
    though, to be entitled to a special award the claimant had to be successful on
    the underlying merits of the dispute and found entitled to recover benefits.
    The section has now gone by the wayside

[45]

Echelon
    submits that the arbitrators ultimate conclusion, at p. 77 of his reasons,
    that a special award was not appropriate is correct, based on the arbitral
    jurisprudence, as there was no evidence of any type of bad faith, or egregious
    conduct on the part of the appellant. The arbitrator found that the
    misrepresentations were innocent, and the result of the same mistake HMQ
    itself made with respect to conclusions about coverage. On this basis, he did
    not make a special award.

[46]

The
    arbitrator noted that a number of cases used the concept of special award in
    the jurisprudence.  He then made two findings concerning s. 7(6). First, he found
    that the function of the special award is to allow an arbitrator to impose
    an added penalty type of sanction upon an insurer where the facts warranted it,
    and after a claimant has been found successful on the merits of the claim: at
    p. 27. He explained, at p. 28:

My overall reading of the
    provisions in their legislative context, and their historical application, leads
    me to conclude that in the absence of explicit statutory direction, a section 7
    (6) special award is not intended to provide a remedy which essentially
    determines the merits of the priority dispute.

See also p. 30.

[47]

Second,
    he added, at p. 31:

Instead, in my view a special award
    under section 7 (6) is to be considered in the form of a costs type of sanction
    if I deem it appropriate for Echelons failure to comply with the terms of
    section 3.1, and
provided
I find HMQ otherwise successful on the merits
    of its claim. [Emphasis in original.]

[48]

In
    my view, the arbitrator erred in this determination, for two reasons. First, the
    narrow reading of his authority under s. 7(6) compelled the arbitrator to
    pursue the convoluted common law route to an effective remedy that occupied
    many pages of his lengthy decision. This extended the arbitration well beyond
    its normal summary dimensions and was, in my view, an unnecessary side trip.
    While the arbitrator has jurisdiction under the
Arbitration Act, 1991
to take that road, there was no need to
    do so in this case. This is the summary perspective within which an arbitration
    under the Regulation is intended to operate, as Sharpe J.A. noted in
West
    Wawanosh.


[49]

Second,
    s. 282(10) was repealed in 2016. There is no reason to implicitly import the
    express limitations on a special award found in an earlier repealed provision.
    It is trite law that the words of an Act are to be read in their entire context
    and in their grammatical and ordinary sense harmoniously with the scheme of the
    Act, the object of the Act and the intention of the legislature. See
Bell ExpressVu Limited Partnership
    v. Rex
,
2002 SCC 42
,
[2002] 2 S.C.R. 559
, at para. 26; and
Rizzo
&
Rizzo
Shoes Ltd. (Re)
,

[1998] 1 S.C.R. 27
, at para. 21, quoting Elmer
    A. Driedger,
Construction of
    Statutes
, 2nd ed. (Toronto: Butterworths, 1983), at p. 87. Implicitly
    importing repealed limitations would not be consistent with the accepted
    approach to statutory interpretation, which is to give effect to the text of
    the provision resorting only to the implication of additional terms where that
    is necessary and consistent with the statutory scheme.

[50]

In my view, the arbitrators interpretation of s. 7(6) of the
    Regulation as it related to the jurisdiction to make a special award was
    unreasonable. Contrary to his view, it permits an arbitrator to resolve the
    priority dispute by requiring an insurer to fully reimburse the Fund for
    benefits paid for which the insurer was properly responsible, in addition to
    the costs of the investigation and legal fees, and ordering any sanctions the
    arbitrator might find to be warranted. This reading rounds out the regulatory
    scheme. However, since the arbitrator imposed a reasonable award, the appeal
    should be dismissed.

E.

DISPOSITION

[51]

I
    would dismiss Echelons appeal for the reasons given, with costs payable to the
    Fund in the agreed amount of $10,000 all-inclusive.

Released: P.L. July 25, 2019

P. Lauwers J.A.

I agree. Fairburn
    J.A.

I agree. I.V.B.
    Nordheimer J.A.


