Ontario (Minister of Finance) v. Progressive Casualty Insurance Co. of Canada, (2009) 247 O.A.C. 350 (CA)

• Judge: O'Connor, A.C.J.O., Doherty and Rosenberg, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 25, 2009
• Jurisdiction: Ontario
• Citations: (2009), 247 O.A.C. 350 (CA);2009 ONCA 258

Ont. v. Progressive Casualty Ins. (2009), 247 O.A.C. 350 (CA)

MLB headnote and full text

Temp. Cite: [2009] O.A.C. TBEd. MR.110

Her Majesty The Queen in Right of Ontario, as represented by the Minister of Finance (plaintiff/respondent) v. Progressive Casualty Insurance Company of Canada (defendant/appellant)

(C47212; 2009 ONCA 258)

Indexed As: Ontario (Minister of Finance) v. Progressive Casualty Insurance Co. of Canada

Ontario Court of Appeal

O'Connor, A.C.J.O., Doherty and Rosenberg, JJ.A.

March 25, 2009.

Summary:

Section 268(2)(1) of the Insurance Act determined which insurer was liable to pay statutory accident benefits to an injured motor vehicle passenger. Section 268(2)(1)(iv) made the Motor Vehicle Accident Claims Fund liable if no insurer was liable. Regulation 283/95 (Disputes Between Insurers Regulation) provided that if insurers disputed who between them was liable, the first insurer to receive an application for benefits was to pay the benefits pending resolution of the priorities dispute by arbitration. Progressive, the driver's insurer, denied liability on the ground that coverage had been cancelled for nonpayment of premiums. Progressive and the Fund each claimed that the other was responsible to pay the benefits. After the limitation period for arbitration lapsed with neither of them requesting arbitration, the Fund, having paid the benefits, sued Progressive for a declaration and restitution for the paid benefits.

The Ontario Superior Court, in a judgment reported [2007] O.T.C. Uned. 810, allowed the action and found Progressive liable. The court held that the Fund could sue Progressive for a declaration and restitution without being required to proceed to arbitration. The Fund was not bound by the notice requirements in the Regulation and, in any event, the Fund substantially complied with the requirements and Progressive was not prejudiced. The court rejected Progressive's claim that its insurance coverage had terminated for nonpayment of premiums. As insurance was in place, Progressive was responsible under s. 268(2) to pay the benefits. Progressive appealed on the grounds that the court lacked jurisdiction because of mandatory arbitration. Alternatively, if a restitution action was permitted, the Fund failed to comply with the notice provisions of the Regulation. Progressive did not appeal the finding that insurance coverage had not terminated, effectively admitting that it was responsible under s. 268(2) to pay the benefits.

The Ontario Court of Appeal dismissed the appeal. The Fund was an "insurer" bound by the Regulation's requirement that disputes be arbitrated. However, the circumstances of this case fell within that rare "proper case" exception which permitted a court action for restitution notwithstanding the arbitration requirement.

Courts - Topic 11

Stare decisis - Authority of judicial decisions - General principles - Application of judgments - Prospective or retrospective - A trial judge held that a Court of Appeal decision should have prospective effect only, as a change in the law should not be applied to cases where the relevant events preceded the decision - The Ontario Court of Appeal held that the trial judge erred - First, the "new law" pronounced would be a retrospective, not retroactive, application of the decision - Second, while new legislation was presumptively prospective only, judge-made law was by its nature inherently retrospective - Third, the Supreme Court of Canada had rejected prospective judicial lawmaking in the private law context - Finally, even those advocating prospective lawmaking saw it as an exception to the general rule of retrospectivity - The court stated that "if an appellate ruling is to have something less than its normal retrospective impact, it is for the appellate court making that ruling to specifically announce the limitation. Absent the placing of any limit on the new rule by the appellate court announcing the rule, trial judges must apply that rule to subsequent cases" - See paragraphs 50 to 60.

Insurance - Topic 5056

Automobile insurance - Compulsory government schemes - Bodily injury and death benefits - Priorities (incl. dispute resolution) - Section 268(2)(1) of the Insurance Act determined which insurer was liable to pay statutory accident benefits to an injured motor vehicle passenger - Section 268(2)(1)(iv) made the Motor Vehicle Accident Claims Fund liable if no insurer was liable - Regulation 283/95 (Disputes Between Insurers Regulation) provided that if insurers disputed who between them was liable, the first insurer to receive an application for benefits was to pay the benefits pending resolution of the priorities dispute by arbitration - Progressive, the driver's insurer, denied liability on the ground that coverage had been cancelled for nonpayment of premiums - Progressive and the Fund disputed who was liable to pay the benefits - After the limitation period for arbitration lapsed with neither of them requesting arbitration, the Fund, having paid the benefits, sued Progressive for restitution - The trial judge allowed the action and found Progressive liable - The Fund could sue Progressive for restitution without proceeding to arbitration - Progressive did not appeal the finding that insurance coverage had not terminated, effectively admitting that it was responsible under s. 268(2) to pay the benefits, but appealed on the ground that the arbitration requirement precluded a court action - The Ontario Court of Appeal dismissed the appeal - The Fund was an "insurer" bound by the Regulation's requirement that disputes be arbitrated - However, the circumstances of this case fell within that rare "proper case" exception which permitted a court action for restitution notwithstanding the arbitration requirement - The court stated that "by their conduct, Progressive and the Fund effectively chose not to access the arbitration process to resolve their dispute. When, many months later, it apparently became clear that the dispute would not be resolved, compliance with the notice provisions of the Dispute Regulation was no longer possible. A lawsuit for restitution and declaratory relief provided the only means by which the dispute could be determined on its merits and the obligation to pay the benefits placed on the party who, under the terms of s. 268 of the Act, should bear that burden. Absent irreparable prejudice to Progressive, I see no interest that would be served by closing the courtroom door on the Fund in these circumstances." - See paragraphs 1 to 44.

Insurance - Topic 5056

Automobile insurance - Compulsory government schemes - Bodily injury and death benefits - Priorities (incl. dispute resolution) - Regulation 283/95 (Disputes Between Insurers Regulation) provided that if insurers disputed who between them was liable for statutory accident benefits payable under s. 268 of the Insurance Act, the first insurer to receive a completed application for benefits was to pay those benefits and the dispute was to be resolved by way of arbitration - Arbitration was subject to the "proper case" exception, whereby a court action to resolve the dispute was appropriate - The Ontario Court of Appeal stated that "the 'proper case' exception exists for those cases where the merits of the dispute cannot be reached through the Dispute Regulation and there is no prejudice caused to the defending party by addressing those merits in the context of a restitution claim. Without laying down any hard and fast rules, I suggest that the answer to the two questions posed below will assist in identifying those cases that constitute a 'proper case' to permit a party to proceed by way of a restitution claim: Were the ultimate parties to the s. 268 dispute engaged in a dispute over payment of benefits within the time limits set out in s. 3 of the Dispute Regulation and did the parties, either expressly or by implication from their conduct, choose not to proceed under the Dispute Regulation? Was arbitration in accordance with the process set out in the Dispute Regulation no longer possible when objection was first taken to a party proceeding by way of a restitution claim? If the answer to both questions is yes, a common law action for restitution provides the only way that the dispute can be resolved according to the priority scheme established in the Act. The choice is between permitting a restitution action in which the merits of the claim can be addressed, and potentially sanctioning the imposition of the burden of the s. 268 benefits on a party other than the party who should bear that burden under the terms of the Act. If the first choice can be made without irreparable prejudice to the defending party, the interests of justice warrant treating the case as an exception to the general rule requiring arbitration ..." - See paragraph 39.

Insurance - Topic 5189.1

Automobile insurance - Compulsory government schemes - Uninsured or underinsured motorist coverage - Recovery by claims fund - [See first Insurance - Topic 5056 ].

Cases Noticed:

Allstate Insurance Co. of Canada v. Motor Vehicle Accident Claims Fund (2007), 84 O.R.(3d) 401 (C.A.), refd to. [para. 17].

Ontario (Minister of Consumer and Commercial Relations) v. Employers Mutual Liability Insurance Co. of Wisconsin (1980), 28 O.R.(2d) 397 (C.A.), refd to. [para. 18].

Ontario (Minister of Finance) v. Allstate Insurance Co., [2001] O.T.C. Uned. 294; 14 M.V.R.(4th) 72 (Sup. Ct.), refd to. [para. 20].

Ontario (Minister of Finance) v. ING Halifax Insurance Co. (2003), 15 C.C.L.I.(4th) 281 (Sup. Ct.), refd to. [para. 20].

Kalinkine v. Superintendent of Financial Services Commission (Ont.) et al. (2004), 193 O.A.C. 77; 17 C.C.L.I.(4th) 2 (C.A.), refd to. [para. 22].

Kingsway General Insurance Co. v. Ontario (Minister of Finance) (2007), 84 O.R.(3d) 507 (C.A.), refd to. [para. 24, footnote 2].

Épiciers Unis Métro-Richelieu Inc. v. Collin, [2004] 3 S.C.R. 257; 326 N.R. 89, refd to. [para. 53].

Cusson v. Quan et al. (2007), 231 O.A.C. 277; 87 O.R.(3d) 241 (C.A.), leave to appeal granted (2008), 386 N.R. 392 (S.C.C.), refd to. [para. 54].

National Westminster Bank plc v. Spectrum Plus Ltd. et al. (2005), 338 N.R. 201; 2005 UKHL 41, refd to. [para. 54].

Hislop et al. v. Canada (Attorney General), [2007] 1 S.C.R. 429; 358 N.R. 197; 222 O.A.C. 324, refd to. [para. 55].

Friedmann Equity Developments Inc. v. Final Note Ltd. et al., [2000] 1 S.C.R. 842; 255 N.R. 80; 134 O.A.C. 280, refd to. [para. 55].

Edward v. Edward Estate and Skolrood (1987), 57 Sask.R. 67; 39 D.L.R.(4th) 654 (C.A.), refd to. [para. 56].

Kleinwort Benson Ltd. v. Lincoln (City), [1999] 2 A.C. 349; 233 N.R. 201 (H.L.), refd to. [para. 56].

Ha v. New South Wales (1997), 189 C.L.R. 465 (Aust. H.C.), refd to. [para. 56].

Statutes Noticed:

Disputes Between Insurers Regulation - see Insurance Act Regulations (Ont.).

Insurance Act Regulations (Ont.), Disputes Between Insurers Regulation, Reg. 283/95, sect. 1, sect. 2, sect. 7(1), sect. 7(2), sect. 8(1) [para. 19].

Authors and Works Noticed:

Duggan, Anthony J., and Roach, Kent, A Further Note on Final Note: The Scope and Limits of Judicial Law Making (2002), Can. Bus. L.J. 115, pp. 128 to 138 [para. 56, footnote 5].

Hall, Geoff R., Preserving the Clavicle in the Cat: Stunted Reform of Common Law Rules in the Supreme Court of Canada (2002), 36 Can. Bus. L.J. 89, p. 104 [para. 56, footnote 5].

Ontario, Financial Services Commission, Insurance Commission Bulletins, Property and Casualty - Auto Bulletin, Bulletin No. A-05/95 (May 29, 1995), generally [para. 21].

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 670 to 673 [para. 53].

Counsel:

Jamie R. Pollack and Amanda M. Lennox, for the appellant;

John Friendly, for the respondent.

This appeal was heard on December 18, 2008, before O'Connor, A.C.J.O., Doherty and Rosenberg, JJ.A., of the Ontario Court of Appeal.

The judgment of the Court was delivered by Doherty, J.A., and released on March 25, 2009.